Are you bold enough to take this coffee stock for a trade? Here is an idea on Green Mountain (GMCR) (August 10, 2015)
I want to look at two coffee stocks. First of all one that we all know and love, Starbucks ( NASDAQ:SBUX ). This is actually giving us an opportunity to buy, this thing on the cheap. First of all the trend is clear, the stock came off $59.00, we’ll call it close to $60.00, failed there and is now coming back down, on volume, on volume and that’s important to note, but it’s still above the 50-day moving average.
You look at the weekly chart and wouldn’t you have actually liked to have bought every one of these red boxes? Well now you’ve got two in a row. I think this works. The closer you can get it to the 50-day moving average, which would be right around $55.00, that’s the lower your risk is. The stock split 2-for-1 here and it’s well above that pre-split level. The reason that’s important is because it tells you that the stock was not moving up simply just because there weren’t enough shares trading, so this works.
Now Green Mountain ( NASDAQ:GMCR ); this is a whole different animal. I would look at Starbucks ( NASDAQ:SBUX ) as the fundamental trade, that’s the majority opinion. Right? Green Mountain ( NASDAQ:GMCR ), this thing scares me to death. It absolutely scares me to death, there’s no way I would short this stock. It would have been nice if I was short here. But my point is, I think a lot of shorts are covering right now. I’m sure there’s some committed ones that say it can even go lower, and they’ll probably ultimately be right, but the low here is 52.40, the stock is trading at 54.61 and is deeply oversold.
I think you can put on a low-risk trade if you impose a stop, 52.35, I mean just below this low. It’s a trade not a vote Green Mountain ( NASDAQ:GMCR ). You put a tight stop here, you’re able to buy very close to the stop, the stock starts rallying through mid 50.00 up toward $60.00 or so; I think that’s your trade. I think it will actually work over the next few days; but I’m telling you if this stock hits a new low you want to get out of there and get out of there fast. Because again, it’s Green Mountain ( NASDAQ:GMCR ), it’s Keurig. Do you really use that stuff anymore? I don’t think so.
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