Green Mountain Turned into a Mole Hill – Now What

Green Mountain Coffee Roasters, $GMCR, reported earnings and showed up with the strictly decaf version. In after hours action it dropped to near 28 from a close at 49.52 just before the report. The weekly chart below shows that if it opens in this area it will have some very interesting characteristics that can help trading it.


First note that it is outside of the weekly Bollinger bands, with the bottom currently at 35. Over the 4 years depicted here it has only once been outside of them materially and it took one week to get back in. The bottom will move lower tomorrow but not likely to 30. Also note that the the Volume at Price bar between 22.65 and 31 is far longer than any other. This shows that there was a lot of trading that took place in that range and it could take a long time to work through it. Next the 200 week Simple Moving Average (SMA) is over head at 36.33. It will be moving higher as the weeks rolling off 4 years ago are still under 10. This could act as a buy signal for many, it has not been below the 200 week SMA since 2004. These all bode well for a short term bounce or at least a stall to the move down. The longer term part of the story though looks very grim. Now with a lot of separation from the 61.8% retracement Fibonacci level of the move higher from the base at 5.11 it is a lot more likely to fully retrace the move. There is also a Head and Shoulders Top from November 2011 til this break that has a price objective of at least 16.25. And worst of all the Measured Move lower, against the move from the 115.98 high to 44 takes it down to zero.

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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.

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