Here’s your trade on Green Mountain Coffee Roasters (GMCR) (June 07, 2014)
I want to look at Green Mountain ( NASDAQ:GMCR ). A pretty big day on Friday, you can look, much heavier volume than usual, and a breakout from this consolidation; the highest close since clear back here when the stock was rolling over. So this type of a wide-ranging day, up almost 9 percent on the day, reveals institutional buying. You know, Billy Bob and Joe’s Fish Tackle, Bait and Money Management firm doesn’t buy this many shares. This is real money coming into this stock, it seems like there’s always pretty short interest here.
I don’t know if that’s the case now, but I just know this; your low risk trade here, it’s actually not low risk with respect to the money that you are risking, because of the distance between where the stock is and your stop. Your stop would be clear down here so you’re risking 12 points, about 10 percent. I like to risk a little bit less than that on an initial trade but what you do is, you look at this stock, you may take a partial position such that if the stock pulls back you’re not freaking out because you’re losing so much money. You could wait for your stop to be hit and still be okay, but you could also be alert for a pull back here and a bounce where it has bounced before.
Be patient with this, but I think it’s fine to buy some stock now, just know that if the market’s weak or if folks come in on Monday and say, “You know what, almost 9 percent a day, I’ll sell.” Or they say, “Resistance twice, three time’s a charm, I’m going to go ahead and sell.” That could happen, so you take a small initial position, but also you can wait for Monday or Tuesday, whatever, for this stock to breakout. If this this territory here, it’s likely going much higher; and by the way once it does that, if you’re buying the breakout, then you set a stop right back in the top of the channel so that you’re protecting your capital that way. So there’s a lot of different things that can happen with this stock, but hopefully I’ve laid out a couple of ways you can trade it with a little bit of safety and take advantage of this uptrend.
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