Yesterday I suggested keeping a tight stop on RIMM. If you did, then you took some really nice profits. Now, let’s look at GMCR for a strategy for trading it tomorrow. (November 27, 2012)

by DAN GMCR BBRY GMCR 
Good evening I’m Dan Fitzpatrick at Stock Market Mentor and OptionMarketMentor.com on Tuesday, November 27th. Yesterday, let me just go back to that for a quick second, yesterday I talked about Research In Motion ( $RIMM Research In Motion Limited (USA) ) and Facebook ( $FB Facebook Inc ) but we’ll just deal with RIMM ( $RIMM Research In Motion Limited (USA) ) and then another one today. I noted that after this kind of move, the stock had closed outside the upper Bollinger Band, which isn’t supposed to happen very often, two days in a row, perhaps even three days if we look at this one here, you look over on the upper left screen, the price closed at $10.26, the top Bollinger Band is $10.04. So for three days in a row this closed outside the upper Bollinger Band. Only really, really, really super strong moves do that, and so the stock was ripe for a pullback and I suggested, you know, you look at the weekly chart and you say, “Well, this is definitely a bottom here, break-out of a bottom so maybe the stock’s going higher but I don’t know.” So my suggestion was, you use yesterday’s, that’s Mondays, intraday low of $11.44 as a stop, that way you’re allowing the stock to continue to move higher, in the off chance that it does move higher, but you’re also getting out at a pretty good price, still actually above the upper Bollinger Band, you’re getting out at a pretty good price if the stock reverses because you’ve got to say it’s ripe for a reversal; so meanwhile the stock closes down over 10 percent on pretty heavy volume, so if you just bought this stock even here and then are just holding it like a knuckle head thinking that its just going to keep going up without using a stop, you’re probably regretting it now. My suggestion, at this point, would be to stay clear of Research In Motion ( $RIMM Research In Motion Limited (USA) ), let it do what it’s going to do and then look for a higher low in order to trade this stock again; but for the time being this isn’t working anymore. Now Green Mountain Coffee Roasters ( $GMCR Green Mountain Coffee Roasters Inc ), let me drag this down a little bit, this is where it’s trading after hours, they announced good earnings and gave excellent forward guidance, that’s the kind of thing that jacks the price up. I had just mentioned this, the first time talked about it for a long time, in Stock Market Mentors Premium, the Strategy Session, which was about a half an hour last night. One of the stocks that I mentioned was Green Mountain Coffee Roasters ( $GMCR Green Mountain Coffee Roasters Inc ), saying that this was a classic volatility squeeze, like a three-step squeeze here. The first is the squeeze itself, the second is the break out, the initial move, then the first phase of a break out, first, is the move higher, the second phase is the pullback to however far it pulls back, you just want to make sure that it doesn’t pull back this far, you don’t want it back into congestion because that would indicate that it was a false breakout; instead you want it to close somewhere up here, it did here, and then it started moving higher. My suggestion to our members was, you use this level as a stop, you go ahead and buy this stock and watch for further upside. Well, we got a heck of a move upside here today and you can think, well, why would you hold it over earnings? The short interest is pretty high and so when you see a stock that’s done this, it’s already come down quite a bit, quite a bit, formed a long base, heavy short interest, it almost didn’t matter what the company announced as long as it wasn’t too bad, it almost didn’t matter, you were going to get a rise in the stock just as shorts started to cover. Because they actually announced good news, again, forward guidance was upped and also great earnings, you know, beat the estimates, you get a heck of a move off the stock here. So now what do you do? I say you look at what happened here as a possibility and what I mean by that is you get a gap up to here and then the stock starts trading down; we don’t know that for sure, if it opens up, up here and then does just start trading down right away you need to sell this and take some profits, assuming you’re long, just sell it if it starts to pull back because you can always buy it back if that’s what you want to do. So I say if you’re already long, if you took this trade yesterday members, or this morning I should say, then if you’re already long set a pretty tight stop, that way if the stock pulls back you’ve got a really nice profit. If instead the stock continues to run then what you want to do is use whatever intraday the low was over the first fifteen or twenty minutes and use that as your reference for stops; wherever it pulled back to, if it didn’t pull back much at all then you’re going to have a pretty tight stop and you watch the stock run up, and you get to participate in further upside. But frankly, in my view, when a stock is up as much as it is, from $29.00 up to about $36.00, up to about $36.00 aftermarket; I’m just looking at CNBC behind me, that’s a stock that’s ripe for profit taking. So let the stock open up, you’re probably going to wind up having a pretty decent short on your hands if you’re not into the stock already, and if you are you just want to sell it, okay? Also, one other thing, and this is really important, our Black Friday sale, where you get 25 percent off of everything in the Stock Market Mentor store, we’ve got a lot of educational products there, that was supposed to end on Friday, which is why they call it Black Friday, but there were a lot of people who were out of town, you know, didn’t check their email, and so they were asking if they could still get the deal, they did, Gary extended it, that’s my brother, he’s the brains behind the operation I’m just the talent, he extended it into Monday calling it Cyber Monday. Well, actually we’ve extended this into today but I’m telling you it will end at midnight tonight, that’s midnight Eastern Time. So if you’re interested in getting a great price on some really great products check that out; in particular I will recommend, if you’re looking at these videos and you like these fast trades, even the trade that I mentioned where you’re selling into this strength, shorting it, you’re going to learn a lot about that in the 59-Minute Trader, that’s been our most popular product by far and yes you can trade options with that as well; so consider that, just get it for a Christmas gift for yourself. I hope you take advantage of that, but either way thanks for watching this video. Members get over to the Strategy Session.

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