$GMCR . Watch the support. $42.78

$GMCR support at $42.78

A few warning signs are coming up for Green Mountain Coffee Roaster ($GMCR).

On the Daily Ichimoku Chart, we can see the following:

1. From the Chikou Span, it suggest that the price pattern is developing a possible head and shoulder. It is incomplete and if it dip below $42.78 , the pattern wil be completed.

2. Looking at the Tenkan sen and Kijun sen, we can see that it is now very close and a bearish cross may form if price dips. Currently, price is still trading above the Tenkan sen and Kijun sen.

3. The leading kumo seems to suggest that the trend is ready to change with a possible ‘kumo twist’. Again, there’s no confirmation.

It seems that the support level of $42.78 from the Chikou Span will be a level to watch.

$GMCR . Weak kumo support at 21.86

It seems like the signals are aligned for GMCR.

1. We have the Bearish cross from Tenkan sen and Kijun sen.

2. It has break support from Chikou Span at 23.49

3. Price is trading near the thin kumo support at around $21.86

4. Leading kumo suggest possible kumo twist; thus confirming that this rally may head back to the bearish territories.

$GMCR . Can it stay above the kumo?

It seems like $GMCR is going to have a setup for a bearish move.

From the Ichimoku chart, we can identify the following trading signals:

1. Bearish cross from Tenkan sen and Kijun sen; reflective of the price dropped from $32 to $24

2. Thin kumo support below the current price level suggests that the support is not strong

3. Steep kumo from the past shows the huge change in business trends, a reminder of the changes its business challenges.

And here’s a reminder :

Why Einhorn shorted GMCR?

  • Low operating cash flow
  • Negative fre cash flow (and getting more negative)
  • CAPEX was high and rising
  • Valuations sky high
  • EPS was slowing and return on invested capital was relatively low
  • Increase competition (<< this is a killer, price pressure on product pricing)
  • Loss of exclusivity patents (where’s the moat?)