Coffee’s Demise Gives a Coffee House Stock Surprise
- Posted by Greg Harmon
- on May 24th, 2012
After running through what looked like a 2 month basing move before a turn back higher, Coffee dove again the last two days. The iPath Dow Jones-AIG Coffee Total Return Sub-Index, $JO, pictured below shows that the prospects are not bright on the short term either. With the touch of the falling 50 day Simple Moving Average (SMA) triggering the move lower, the Bollinger bands are
opening lower and the Relative Strength Index (RSI), and Moving Average Convergence Divergence (MACD) indicator both support more downside. This is good news for the coffee stocks and three of them are perking up. Take a look.
Caribou Coffee, $CBOU
Caribou Coffee, $CBOU, put in a Hammer reversal candle Monday, confirmed it Tuesday and is moving higher. The RSI has worked of the technically oversold condition and the MACD is about to make a bullish cross positive. Resistance comes near the gap at 13 first.
Coffee Holding, $JVA
Coffee Holding, $JVA, broke the trend lower Monday with a strong, near Marubozu candle higher. Now consolidating in a bull flag with the RSI rising and the MACD slightly positive, it has a Measured Move to 8.50 on a break over the the top of that flag.
Starbucks, $SBUX, the coffee king, also found support on Monday at the 100 day SMA and is rising. The RSI is back to the mid line and the MACD is about to cross positive, a bullish signal. A move over 56 sees the next resistance over 60.
Keep an eye on this relationship as it holds very well, what is bad for coffee is good for coffee stocks.
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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)
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