Keurig Green Mountain Inc (NASDAQ: GMCR)

Keurig Green Mountain, Inc. produces and sells specialty coffee, coffee makers, teas, and other beverages in the United States and Canada. It sources, produces, and sells coffee, hot cocoa, teas, and other beverages under various brands in K-Cup, Vue, Rivo, K-Carafe, and Bolt portion packs brands; and coffee in traditional packaging, including bags and fractional packs, as well as offers whole bean and ground coffee in bags, fractional packages, and cans. The company also offers other specialty beverages in portion packs, which include hot apple cider, hot and iced teas, iced coffees, iced fruit brews, hot cocoa, and other beverages for use with its Keurig hot brewing systems, as well as sells coffee-related equipment and accessories, gift assortments and hand-crafted items from coffee-source countries.

Take a look at the 1-year chart of Keurig (NASDAQ: GMCR) with the added notations:

1-year chart of Keurig (NASDAQ: GMCR)

GMCR has been in a solid downtrend for the past year. However, the stock has been trading sideways on top of a $50 support (green) during the most recent two months. Now that the stock appears to be testing that support level again, traders should be able to expect some sort of bounce. However, if the $50 support were to break, lower prices should follow.

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The Tale of the Tape: GMCR has a key level of support at $50. A trader could enter a long position at $50 with a stop placed under the level. If the stock were to break below the support a short position could be entered instead.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT

Follow me on Twitter: @cmtstockcoach