Tonight while looking at the trending tickers on several social media websites we noticed that GMCR stood out on a lot of them and thats why we decided to analyze it and give people our thoughts on where its going. One thing that stood out while looking at the charts was that perhaps we might be a little late to this party as the MACD made a bullish cross in late January. Typically we like to be early when getting into a trade so that we have plenty of time and sufficient profits to keep our greed in check when its time to cash out before the fall. Looking at the charts however it seems like GMCR still has plenty of room to run before its time to cash out though. We are not particularly interested in starting a position in GMCR given that we are late to this run but we will provide our commentary anyways for those that are already in and are contemplating whether to stay in or get out.
Lets look at what the charts are telling us:
– As we can see on the chart the 50 DMA is sitting above the 200 DMA
– Bullish divergence on the slow stochastic (although at overbought levels)
– MACD signal line crossed on Jan 26, 2013
– MACD histogram shows increasing momentum
– RSI near overbought levels
– Slow stochastic near overbought levels
It seems to us that GMCR can sustain its uptrend if for a little while longer. We might initiate a long position if it manages to make it past $50 which has proved to support the price before on the 3-year chart and may now become resistance. We advice caution at current levels but believe the trend has strength. We would set our stop losses near $45 as it would mean a breakout below the trend line shown.
Happy trading! Let us know your thoughts in the comments.
Earnings have been posted on GMCR since we wrote the article and the shares are down 7%. We will be watching the price action tomorrow to determine whether to stay bullish or go bearish or neutral. Our stop loss is still 45$. A follow-up article will be written after examining tomorrow’s price action.