Doughnut Alert
You know, that big bright
red sign at the storefront of Krispy Kreme Doughnuts. They turn that baby on
when doughnuts are floating down that lake of vegetable oil. Once fully baked
they travel through that waterfall of icing. Oh the waterfall of icing! I’m
telling you right now, that red sign is like a Star Trek tractor beam that sucks
you in if you’re within a 1 mile radius of the store.
Anyway, Krispy Kreme is
facing a very critical decision zone in the immediate future. Let’s do a quick
drill down:
1) The stock is in an
orderly downtrend with orderly countertrend rallies. There have been three
countertrend rallies that were each between 9 and 11 points. The current countertrend
rally is at 10 points. Price symmetry!
2) (KKD) is also facing
a large Fibonacci price resistance zone from 37.15-39.61. This zone has 8
Fibonacci price levels.
3) Not only is there a
major decision on the price dimension, but there is a very important time
zone coming up. I have 5 time cycles pointing to a possible reversal to the
downside between November 22nd and 26th. That’s basically a range of 3 trading
days.
4) The last two countertrend
rallies were 29 days and 35 days. This rally from the October 10 low is now
at 29 days.
The fact that I have the
price and time dimensions lining up, I can’t ignore the possibility for a sizeable
reversal to occur in the coming sessions. I’m looking for opportunities to short
this stock. If triggered in my stop would be just above the price resistance
zone. The flipside to this set up is if (KKD) rallies up through resistance.
In this situation the stock would be violating the symmetry of the downtrend.
At that point I would back away from shorts and consider buying on pullbacks.
For now, the focus trade is on the short side so keep this one dialed in and
let’s see what happens.
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Good night!
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