Thursday, December 4, 2014

GMCR Keurig Green Mountain Weekly Chart

GMCR is a momo darling for the last couple years that has far outperformed the broad market; from 20 to 160, +700%, an 8-bagger. The red rising wedge, overbot conditions and negative divergence create the spank down that was forecasted last year. The hype remains around the stock as a potential takeout candidate and the market share of its products and ongoing momentum carry the stock higher. This year a longer term rising wedge forms, and fails, three weeks ago. The negative divergence creates the smack down. The MACD negative cross occurs. Stochastics are under 50% in bear territory and RSI is dropping there.

The dots show price extended above the moving averages so a mean reversion is needed. Price is already down to the 20 MA at 135. A bounce is reasonable here but the weak indicators and negative MACD cross should carry price lower. The collapses from rising wedges can be quite dramatic. A move to the 50-week MA support at 116.72 and rising is a reasonable expectation. Longer term, the stock appears to be peaked out. Sure it may come up for one more look but GMCR is topping out as per the indicators. Of course if a deal is announced the stock will likely jump. There is no reason to be in GMCR from the long side. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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