Some Coffee is Stronger than Others
- Posted by Greg Harmon
- on August 24th, 2011
Coffee stocks have been strong and market leaders over the last few months. In fact they have been so strong that there is no need to look further left than 3 months on most of their charts. There are five names that I actively track and trade, Green Mountain Coffee (ticker: $GMCR), Coffee Holding (ticker: $JVA), Caribou Coffee (ticker: $CBOU), Peet’s Coffee & Tea (ticker: $PEET) and the granddaddy Starbucks (ticker: $SBUX). All had a great run and then pulled back but are are now poised to move higher. But one of these stocks is not like the others. Lets take a look.
Caribou Coffee, $CBOU, pulled back from it’s mid August high and found support at the 50% Fibonacci retracement of teh move higher at 13.21. It is now rising off of that support and at the previous 38.2% Fibonacci level with a Relative Strength index (RSI) that is rising and a Moving Average Convergence Divergence (MACD) indicator that is improving. Using the Andrew’s Pitchfork it is heading for the Median Line near 15.75. It has been a strong stock and looks strong now.
Peet’s Coffee & Tea, $PEET, has had an even longer run higher since last October. But it to peaked in August and pulled back, finding support at 38.2% Fibonacci retracement level. It is also now rising with a RSI that is rising and a MACD that is improving towards a positive cross. The Andrew’s Pitchfork suggests that it is being drawn towards the Median Line at 60.
The charts for Green Mountain Coffee (ticker: $GMCR), and Coffee Holding (ticker: $JVA) have similar characteristics. But the chart for Starbuck, $SBUX, below is noticeably different. It has the same rising RSI and MACD that is about to cross positive, but $SBUX topped in July and consolidated into early August before falling. It rebounded and then fell again only to get a second lift the last two days. Does that pattern sound familiar? It should as it is the same as that of the S&P 500 SPDR (ticker: $SPY) as shown on the inset to the chart. $SBUX is not acting like a market leading coffee stock. Rather it is just moving with the market. It also looks to be headed higher to resistance near 39 if it can get over 37.50. But if you are looking for a market leading Coffee stock Starbucks is not the place to shop. This could be an important distinction to remember if the broad market rally were to stall or reverse.
If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
- Top Trade Ideas for the Week of November 30, 2015: The Rest
- Top Trade Ideas for the Week of November 30, 2015: The Rest Premium
- Top Trade Ideas for the Week of November 30, 2015: The Best
- SPY Trends and Influencers November 28, 2015
- Macro Posts This Past Week
- Macro Week in Review/Preview November 27, 2015
- How this Week’s Top 10 Performed, November 27, 2015
- Black Friday Sale on Gold
- Happy Thanksgiving from Dragonfly Capital
- Why a December Rate hike is not a lock