Here’s a trend referencce for the squeeze in Green Mountain (GMCR) (March 12, 2013)
GMCR QCOR GMCR
I’m Dan Fitzpatrick at StockMarketMentor.com on March 12th, Tuesday. I want to look at Green Mountain Coffee Roasters ( $GMCR Green Mountain Coffee Roasters Inc ). I talked about this yesterday as a volatility squeeze, kind of a short squeeze here. This has been up, it’s at just 62 cents today, but the market was basically in profit taking mode and this was working. Another one that I talked about was Questcor ( $QCOR Questcor Pharmaceuticals Inc ). Don’t know much about it, but 95 percent of the float was short; that’s what I saw, so I’m not exactly sure why this thing isn’t screaming up to $50.00, maybe it was a typo. But I do know this, after this kind of squeeze, this actually is a pretty good example of our volatility squeeze method of analysis, where we have the squeeze here, and then it’s a three-phase thing. Phase one is the initial move higher here; it peaked at the 200-day. Phase two is the pullback; we don’t know how long that’s going to be we just know it was in phase two. Then ultimately, when the stock starts moving higher, and at some point it’s going to, then when the stock starts moving higher we’re able to put a stop there, and then look for a continuation here on phase three. This is just a method of analysis, it’s not a predictive mechanism it’s not trading methodology; it’s just a method of analyzing these one, two, three; or one, two, oh crap, no three. Or one, two, three, oh crap, no extension,or one, crap reversal. So this is just the method that I use. If the word crap offended you, then just insert the word crud, or shoot, or darn, or heck is a good one, which is actually a stock that Jim Cramer likes. So anyway back to Green Mountain ( $GMCR Green Mountain Coffee Roasters Inc ). So Green Mountain Coffee Roasters ( $GMCR Green Mountain Coffee Roasters Inc ) is working well. What I would suggest doing is zooming out, looking at the weekly chart, and you can see this stocks made a big reversal here. Do something like this; let’s say we made this 50-day moving average to like an eight moving average, and let’s say we made it exponential. What’s that going to give us? That gives us a nice approximation of the uptrend here in a volatility squeeze, I do this stuff all the time, you can use chandelier stops, you can use various other stops, trailing stops, but this is a good one. Here’s what you don’t want to do, because then you’re going to curse me out and say this stuff doesn’t work. You don’t want to put a stop right along this, because ultimately, this is going to be tagged, and you know what? You’re going to get stopped out and then the stock’s going to continue higher; I swear it will happen. So instead you just want to use this as a trend tool as a reference. As long as this stocks above that then you’re good to go. If it starts drifting below, testing it, testing it, and trading sideways, that’s when you want to just go ahead and take profits, because you’re going to see this kind of thing. Here’s a case in point, right here, look at the way Green Mountain ( $GMCR Green Mountain Coffee Roasters Inc ) was trading here; broke out above it, well, it tagged it there, there, almost there, finally there, and then it started trading sideways. So remember, this is just an indication of trend, it’s a reference for trend, it’s not a stop loss method, it’s really more of a risk management tool. Anyway, I hope that helps you. Members get over to the Strategy Session; got some interesting stuff for you in the telecom sector. Free Chart