Beam Suggests Americans Have Stopped Drinking
- Posted by Greg Harmon
- on November 27th, 2012
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I thought Americans loved alcohol and reality television. So what is going on with Beam Inc, $BEAM? They have all the Bethany Frankel Skinny Girl Cocktails, and mainstream and high end bourbons like Maker’s Mark and Knob Creek and their signature Jim Beam Bourbon. Yet their stock price has been in a downward channel since peaking in June. The chart below shows no signs of letting up with a Relative Strength Index (RSI) that is bearish and heading back lower and a moving Average Convergence Divergence indicator (MACD) that is crossing back to negative. These in
Beam Inc, $BEAM
fact support more downside. And despite the near 50% pullback of the upward move, the short interest is under 1%. This looks headed to test the 50% Fibonacci retracement at 52.33 and a move under that likely to try 49.57, the 61.8% retracement, before it is over. A break of the channel lower could signal real trouble in the stock. There is no indication of a bottom or any reason to buy this name. You have three choices. Short it outright using a $2 trailing stop. Short it against Diageo, $DEO, which has a fabulously bullish chart. Or walk away. No, Americans have not stopped drinking.
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Gregory W. Harmon CMT, CFA, has traded since 1986 and held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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