DataTrader: Traders Roast Green Mountain Coffee Roasters
With banks down more than 8% and oil companies plunging by 7% or more, the pullback of more than 10% in shares of Green Mountain Coffee Roasters (GMCR) still stands out – though maybe for different reasons than many think.
Shares of GMCR have been trending lower since rallying to new year-to-date highs shortly after mid-September. And despite a sell-off that at times has gone to extreme levels (GMCR sold off for five days in a row at the end of September), the stock has remained above its 200-day moving average.
Monday’s reversal, however, has brought GMCR to its lowest level since late June. And if the selling we experienced on Monday is met with further, follow-through selling on Tuesday, then there is a likelihood of the stock making what would be its second consecutive close in oversold territory.
If GMCR pulls back further in the first half of the week, should traders consider the stock a potential buying opportunity? Right now, after a 10% sell-off shares of GMCR have moved from “consider avoiding” territory to neutral. But previous instances when GMCR has made significant and enduring pullbacks have tended to lead to short term gains in the stock. This was true during the stock’s pullbacks in early and mid-August, and was true during the stock’s most recent 5-day sell-off (noted above).
As always, the past performance of GMCR is no guarantee of how the stock will perform going forward. But if traders are looking for stocks that have been put on sale during the market’s most recent sell-off, a stock like GMCR that continues to trade in bull market territory despite the volatility may be a stock worth watching in the near term.
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David Penn is Editor in Chief of TradingMarkets.com