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Thursday, April 29, 2010

GMCR

Normally I post breakouts, but today I wanted to look at one of the leading stocks that is breaking down. GMCR had an earnings disappointment, which gapped it down big, but this was breaking down well before that. About two weeks ago it broke the 50dma on heavy volume, a very clear warning. Did someone big get advance notice? We'll probably never know, but in a case like this, I would have assumed yes until proven otherwise. The good news is it is still above major support and the 200dma, but it's leadership status is now pretty much over.



On the weekly chart theere are 3 major pivot points at 30, 55, and 80. The 80 level is now history, and there really aren't any low risk entry points above 55. This has undergone 2 weeks of heavy distribution, has had a high short interest ever since it started rallying in late 2008, and will probably attract a lot more shorts. At this point it is damaged goods and I would wait for the next quarter's report to see if it contimues to deteriorate.

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