PPR - Pocket Pivots in Real-Time: JVA Clears the 50-dma, MON Fails.

Published : August 29 2011 at 17:30 ET

Coffee Holdings, Inc. (JAVA) kicked into gear in the final hour of trading and cleared its 50-day moving average, something we told you to watch for in our earlier intra-day email. The stock traded just below the 50-dma and the 18.62-67 price level all day before pushing higher. This is coming right off the lows of the base and there is some potential congestion and resistance starting at around the 20 price level, so it will be interesting to see if JVA can power its way through this. The daily chart of JVA shows that the only way you can ever really buy this thing is when it is showing a pocket pivot buy point. Today's pocket pivot is different from the other two in that it is a "bottom-fishing" pocket pivot which is somewhat more risky to buy. Other pocket pivots in the pattern occurred at Pocket Pivot #1 which signalled a pocket pivot buy point at around the $8 price level just before a gap-up breakout to new highs from a "cheap stock" cup-with-handle base, and at Pocket Pivot #2 which was a breakout from an ascending flag type of formation that then led to a climactic run to the $30 price level and almost a two-bagger in six days. If you bought the intra-day breakout through the 50-day moving average going into the last hour of trading today, a violation of the 50-day moving average, now at 18.62, would be your most handy selling guide. JVA is a smaller, more volatile stock, so make sure your position size is commensurate with the increased risk.

Monsanto Co. (MON), in contrast to JVA, could not hold above its 50-day line after fighting back above the line earlier in the day. The stock close about 1.5% below its 50-day moving average on heavy volume, as can be seen on the daily chart, below. While not meeting the proper parameters for a bona fide pocket pivot, MON was able to hold above its 200-day moving average and within the upper half of its trading range on very heavy volume. At first glance this has the look of supporting action on the day, but that is not entirely clear as the stock could also turn out to be shortable at current levels using the 50-day moving average and/or the high of today as a quick stop. Conceivably, one could short MON here on that basis, surprisingly enough, proving that as the evidence shifts in real-time, one must shift with it.


This information is provided by Virtue of Selfish Investing, LLC (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing, LLC. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2016 Virtue of Selfish Investing, LLC. All rights reserved.