Don't Ignore This Chart!

GMCR - Is The Coffee Break Over?

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GMCR recently signed a partnership with Coca Cola. The stock absolutely rocked higher. It pulled back, I posted the chart with the green arrow, showing the climb out of the valley. Well, here we are a few days later.

GMCR 20140325

The MACD failed to give us a positive cross. That is usually a giant warning.  Stops have to be very close as this could break down quickly. If the Nasdaq continues it's underperformance, I would expect these high multiple growth stocks to pull back.

This is the chart I use to demonstrate the Nasdaq underperformance.

 


$SPX $NDX 20140325

When this chart is going up, the $SPX is outperforming the high growth stocks in the Nasdaq 100.

That is a very big caution for me that a trend is changing. A rotation into value stocks like JNJ and WMT seems to be occuring.

Good trading,

Greg Schnell, CMT

Greg Schnell
About the author: , CMT, is a Senior Technical Analyst at StockCharts.com specializing in intermarket and commodities analysis. He is also the co-author of Stock Charts For Dummies (Wiley, 2018). Based in Calgary, Greg is a board member of the Canadian Society of Technical Analysts (CSTA) and the chairman of the CSTA Calgary chapter. He is an active member of both the CMT Association and the International Federation of Technical Analysts (IFTA). Learn More
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