High Short Interest + Analyst Upgrade = WFMI up 5%

Whole Foods Market Inc. (NASDAQ:WFMI) shares have taken a huge beating and before yesterday's close sat at $1 above their 52-week low.  Add to that a 19% short interest all it took was one analyst upgrade and up 5% we go.

The Upgrade came in this morning from FTN Midwest: 

Masters with high gas prices and groceries so expensive, there's no surprise WFMI shares have been dropped like a rock.  Use caution playing this stock but what you can argue with is WFMI is here to stay. 

Forbes.com take:

The shares of upscale organic grocer Whole Foods Market (nasdaq: WFMI) have suffered since hitting a peak of $79.90 in December 2005. The stock is falling under resistance from its 10-month and 20-month moving averages. Taking a closer look, we find WFMI struggling with resistance at its 10-day and 20-day trend lines.

Options players are extremely optimistic, as they try to call a bottom for the shares. The put/call open interest ratio for WFMI stands at 0.81 and is lower than 92% of all those taken during the past 52 weeks. In other words, investors have been more optimistically aligned only 8% of the time during the past 52 weeks. From a contrarian perspective, this optimism against the stock's technical weakness has bearish implications.

On the other hand, short-sellers are confident that the equity will continue to fall. More than 23.5 million WFMI shares have been sold short, accounting for nearly 19% of the company's total float. Should these skeptics add to their winning positions, it could increase the selling pressure on the stock, pushing it lower. An Aug. 29 put would allow an investor to bag a profit on this under-performing security.