OptionPundit

Tag: Barrons

  • Green Mountain Too Hot to Hold

    Today Barron’s reported that GMCR may be too hot and investors should look closely at the company’s profits through purchases from royalty-paying licensees. A few weeks back I published my bearish bias contrary to what Zacks had (Aggressive Buy) and suggested two different ways to trade GMCR. With shares trading at almost 60 times earnings for the current fiscal year, investors should look closely at why earnings beat analyst forecasts by 40 percent while sales beat by only 8 percent, Barron’s said.

    The earnings increase was driven by an 85 percent increase in royalties the company gets from other companies selling coffee in its proprietary single-serve cups, called K-Cups, Barron’s said.

    GMCR will trade on post split (3 for 2) today. We’ll see if Barron’s profiling gives much needed correction to GMCR when it starts trading today; thus increasing my gains and probably for those who shared similar opinion.

    Profitable Trading, OP

  • Buckle-Up

    Time changes so quickly, what seemed almost impossible a few months back, just turned into reality and markets are no different. Who would have thought just a year back that Markets all the around world will be cut into half, who would have thought the massive destruction of personal wealth in such a short period? Sure I did warn starting Nov 07 but I myself never had thought the extent. This is one monster grueling bear. As we traveled through those passes, the picture turned clear and clear when I fist warned in Sept to stay away if Dow drops below 10,700, followed my warning for 8,000 and then my final warning to stay away should market cross 7,500 (+/- 200 points).

    Personally I am very concerned. The Dow has broken the 50% principle and if that hold true (as has been several times in the past), the bottom is still far. There is no panic buying in the market rather every rally is being used as an excuse to sell.

    According to Lowry’s research the buying power is multiple decades low and selling power is only slightly below the peak. Even a slight increase in selling pressure during lack of buying environment (demonstrated by 90% up day) can trigger huge sell-off easily. This has been the case, time and again. John Hussman is cautioning his readers to “Buckle-Up”. He writes- “I suspect that the markets are about to get volatile, possibly to an extent beyond what we observed in October and November“.

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