Dark Chocolate, Prostate Cancer and Medicaid

• Posted by Greg Harmon
• on March 30th, 2011

Hershey came out after the close on Wednesday stating that due to rising input costs they would be raising prices by 9.7%. The price of dark chocolate is going up. What, inflation in food and input costs (see link below)? This is not good news for those eating dark chocolate to prevent prostate cancer. Expect the number of these cancers to rise now as more people cannot afford this preventive measure. But will this impact the stock price? Below is the chart for Hershey Foods (ticker:$HSY).

The chart may have been forecasting this as it has been in a rising wedge and showing signs of topping. it is very extended from the Simple moving Averages (SMA’s) and the moving Average Convergence Divergence (MACD) indicator is running negative, but with a Relative Strength Index (RSI) that is very strong. This is one to watch for Thursday. If it falls through the wedge at 54.30 and the support at 54.15 then the next support is at 53 and then 52.62 the bottom Bollinger band. The top Bollinger band at 55 will provide resistance. After hours it is trading flat.

Medicare officials moved with lightning speed to deal with the likely increase in prostate cancer. Dendreon (ticker:$DNDN) learned Wednesday after the close that it’s prostate cancer drug Provenge would be covered by Medicare. From a technical perspective, this may be enough to break it higher.

Wednesday it touched the downtrend resistance line that has capped it since October. This was also a test of the 50% retracement of the downward move from September. It then finished the day below the 38.2% Fibonacci level and the 200 day SMA. It had the look of a top. But the stock was trading up over 36.15 in the after market on the news, back above these levels. If it can hold up tomorrow then a retest of the 50% Fibonacci level and the downtrend line are back on the table. Above that resistance the next level is at 39.10. If it does not then support is at the 100 SMA at 35.30 then 34.28. The RSI and MACD indicator suggest the easier route is higher.

Who would have thought that the major theme for the market Thursday would be prostate cancer? Well maybe there may be other themes too.

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