Shares of The Kroger Co. (KR) extended their rally during Wednesday's session after the company reported a sharp 30% increase in March comparable sales. The move was driven by dramatically heightened demand in the middle of the month as consumers stockpiled food. While these trends tapered by the end of the month, sales remained higher than normal in the final week.
While the overall market is trending lower, social distancing stocks such as Kroger, Blue Apron Holdings, Inc. (APRN), and Papa John's International, Inc. (PZZA) have been robust performers. These companies could benefit from "stay at home" orders and restaurant closures that have increased demand for eating at home options or delivery services.
Kroger has also been taking actions to reassure its own workforce. In addition to a one-time bonus for frontline workers, the company recently provided employees with a $2-per-hour raise above and beyond their normal wages until April 18. The move comes as Whole Foods and other companies have seen worker relationships strained due to the COVID-19 outbreak.
From a technical standpoint, Kroger stock extended its rally dating back to mid-March. The relative strength index (RSI) remains neutral with a reading of 52.22, but the moving average convergence divergence (MACD) remains in a bearish downtrend. These indicators suggest that the stock could see ongoing volatility in both directions over the coming sessions.
Traders should watch for consolidation above the 50-day moving average at $29.56 over the coming sessions before the stock retests reaction highs of $33.80 or $37.00 over the coming weeks. If the stock breaks down from the 50-day moving average, traders could see a move to retest reaction lows of around $28.00, although strong fundamentals could create a bullish bias.
The author holds no position in the stock(s) mentioned except through passively managed index funds.