682 7 6
Green Mountain Coffee             Roasters ( GMCR             ) is nice and oversold medium-term and is turned up strongly short-term. The technical pattern here is simply a violation of the downward regression line from the highest close to the lowest close in the last 3 months. Note the small head-and-shoulders pattern which implies only a small upside move, but beware that a set-back to test that based could be ahead.

The BREAK-OUT, FAKE-OUT move back in August was followed by a BREAK-DOWN, SHAKE-DOWN decline to almost fill the chart gap at the 58 level. It is a nice when gaps fill all the way, but it just doesn't always happen exactly. The massive volume on the gap implies there were a LOT of value buyers of GMCR             at the 58 level, so the fact that it got close but didn't touch it alerts me to the idea that there is tremendous valuation support at 58.

I would look for a test of the middle of the trading range that GMCR             had before the two moves out of the 82-68 trading range. I highlighted a box of 72-77 as a target range for the end of the year.

Stop loss is 3 average daily trading ranges (11-day average) subtracted from your entry price.


Tim 11:31AM EST, Monday, November 4, 2013
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Happy Holidays...Thanks for all you share.
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This ended up right in the target box on 3 swings now and just in time for the holidays. Cheers.
Well, so far the timing hasn't been so great. The only good comment is the "tremendous valuation support at 58" seems true after the sharp drop to test $57, which may have cleared out some of us bottom-pickers. Had you waited to buy on a dip to 62 or 61, then maybe you are still alive here. However, I do think that the GMCR products will be popular gifts for the holidays - I see they have them marked down to a much more affordable level in major stores like JCPenney and Kohl's. GMCR will make a lot of money if you buy their coffee to put in their one-serving dispensers. As for this trade, the way I am positioned is in the Dec 60 puts, which gives me an entry price of $54 if I am put the stock.
Good analysis, great catch on the 6month fill
Maybe it wanted to completely fill the gap now its on the Watchlist
In GMCR have big shorts. They have problems to promote products in Canada. The company claims restruktorizatsii from previous management. At most times the target price of $ 75. This speculation can work. I think that there will be between $ 75 again big shorts
Tim, thank you very much for the idea! I really love it - very clear and logical. What is the good entry price considering yesterdays down bar?
+1 Reply
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