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ELLIOTT WAVE


A Caffiene Jolt With Green Mountain Coffee

03/03/15 12:19:47 PM
by Koos van der Merwe

Considering buying shares in Keurig Green Mountain Coffee? The monthly chart suggests this isn't a good time to buy but the weekly and daily chart suggest that it is a good time to buy. Which chart do you follow?

Security:   GMCR
Position:   Buy

You will often hear analysts give buy recommendations on popular financial media outlets. In fact, I just heard the following report, "Your first trade on Monday, March 2, 2015 is Keurig Green Mountain Coffee." Are they basing their decision on technical analysis or fundamental analysis? I only consider technical analysis, and leave the fundamentals to the Warren Buffetts of this world, so what do the charts tell us?

Figure 1. Monthly Chart Of Keurig Green Mountain Coffee (GMCR). Here you see that a WAVE 5 has completed and the stock price is now in an A-WAVE down.
Graphic provided by: AdvancedGET.
 
My chart in Figure 1 is a monthly chart of Keurig Green Mountain Coffee (GMCR), with an Elliott wave count suggesting that the share price has completed a WAVE 5 and is now in an A-WAVE down. The candlestick shown on the chart with a long tail and a short white body is suggesting a reversal could be on the cards. This means that the share price could start moving up in a B-WAVE. The MACD indicator is suggesting a sell signal is in the offing. Buying for the long-term is therefore not on the cards.

Figure 2. Weekly Chart of GMCR With Elliott Wave Count. This chart suggests that a WAVE 4 has been completed and the share price is now moving into a WAVE 5.
Graphic provided by: AdvancedGET.
 
The chart in Figure 2 is a weekly chart of GMCR showing an Elliott wave count that suggests that a WAVE 4 has been completed, and that the share price is now moving into a WAVE 5 with a target of $195.94. The probability index (PTI) of 48 shown on the chart is average, suggesting that the rise to $195.94 is indeed possible. The relative strength index (RSI) has given a buy suggesting that for the medium-term, the share could be bought.

Figure 3. Daily Chart With Elliott Wave Count And JM Internal Band. The price of GMCR stock could be in a WAVE 1 of a new bull trend.
Graphic provided by: AdvancedGET.
 
The chart in Figure 3 is a daily chart of GMCR with an Elliott wave count suggesting that the share price could be in a WAVE 1 of a new bull trend. The RSI and the ADX(14) indicators are indicating buy signals. However, the DMI is still trending down suggesting weakness ahead. This could suggest that a wave 2 is in the offing. Finally, note the JM Internal Band indicator which gave a buy signal on February 20, 2015. The JM Internal Band is a 15-period simple moving average offset by 2% positive and 2% negative. A move above the upper band is a buy signal, and a move below the lower band, a sell signal.

Buying the share at the present price is a risk that could be taken for the short-term. With a wave 2 correction on the horizon, a long-term investor could wait for the correction.



Koos van der Merwe

Has been a technical analyst since 1969, and has worked as a futures and options trader with First Financial Futures in Johannesburg, South Africa.

Address: 3256 West 24th Ave
Vancouver, BC
Phone # for sales: 6042634214
E-mail address: petroosp@gmail.com

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