SSS - GMCR Chart Analysis for October 17, 2011

Published : October 17 2011 at 12:40 ET

The daily chart of GMCR outlines the trade here. We shorted GMCR up around the 65-dema during the latter part of last week in and around the peak of the potential right shoulder within the overall pattern. Note how GMCR has undercut the October 4th low of 82.40 on an intra-day and that this undercut did indeed spark a temporary rally back up towards the 84-85 level. The stock however is staging a very quick "undercut & rally" and is now failing on the rally part of that equation, pushing below to the 80 level at 9:34 a.m. "beach-time here in LA.

While profits or partial profits could be taken at these levels, depending on how one wants to handle the trade based on their own individula risk tolerance, trading preferences, and price objectives for the trade, it is also possible for the stock to just push lower from here a la NFLX a few weeks ago and at least test the 200-day moving average in a couple of days or less. Obviously nothing is 100% certain on the short-side, as those of you who play on that side of the fence on a regular basis likely already know.


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