PPR - Pocket Pivots in Real-Time: GMCR

Published : May 23 2011 at 12:58 ET

GMCR may be en route to a pocket pivot today if it can manage to close up reasonably well on the day. For now, at least, the volume meets a proper pocket pivot volume signature, but keep in mind that this is likely and mostly due to the stock being added to the NASDAQ 100. That said, the technical positionof the stock within a three-weeks-tight formation is a positive on an objective basis, and even if one were to decide to inititate or add to a position in GMCR on the basis of any potential pocket pivot in the stock today, an easy "out" point is a simple breach of the 10-dma. One could also apply a more technically strict standard and require an actual violation of the 10-day moving average first as a selling guide.

Today's action in the market also warrants that investors act with caution when making any new or additional buys in stocks that are otherwise acting well, so keep your risk management in mind given today's action in the major market indexes with a gap-down open. However, volume on the NYSE is running lower currently mid-day while NASDAQ volume is running just a couple of percent higher compared to Friday, and Friday's NASDAQ volume was well below-average and even lighter considering that Friday was an options expiration day.

Understanding that QE2 is still in force, it is probably not a good idea to try and get aggressive on the short side here, although any inverse ETF or short positions that were already held coming into today could likely continue to be held.

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