Drink Anyone?

The beverage names are normally seen as a refreshing choice during tough times. The “king of beers” chart is showing how it can be good during comfortable times too (peer STZ reported numbers this week and recorded a bearish engulfing WEEKLY candle, and CLOSING the last 5 weeks well off intraweek lows. BUD reversed higher right off the very round 90 number Thursday and looks poised to break above its 50 day SMA. It has advanced 42% YTD and sports a nice dividend yield of 2.2%. Compare that with peer TAP which has risen 1% on 2019, although it does carry a 4% dividend yield. SAM has jumped 60% this year so far, although it did endure a recent 100 handle plus decline between late August and September. It looks back on track with a tasty 9.6% weekly gain this week, pun intended. 

Retail New Issues Not Immune To IPO Slump:

As companies that were planning on coming public shun that now, other that did so beforehand may be regretting that decision. Of course that would be talking about their aftermarket performance. And this softness does not apply only to domestic names as JMIA a German consumer name now trades in the single digits, not long after being rejected at the very round 50 figure the week ending 4/19. LK, the supposed Chineses equivalent of SBUX is now 29% off its most recent 52 week highs (we examine the chart below). Here at home we have REAL, which at 33% off its recent peaks, but is up 4 of the last 5 weeks, three of them rising by at least 10.7%. CHWY is down 37% from its most recent ascent as well, and of course PTON is down a rapid 18% from its own most recent highs.

Examples:

When looking for good shorting opportunities it is a good idea to make sure the candidate is already in a downtrend. Remember trends either up or down tend to remain that way. Below is a good example of GOOS, and how it appeared in our 9/25 Consumer Note. The stock is down 46% from its most recent 52 week highs, without the courtesy of a 2:1 split (humor stab). It has registered three straight negative earnings reactions lower by 7.5, 30.9 and 12.9% on 8/14, 5/29 and 2/14. Resistance was found at the top of the symmetrical triangle late last month, and it did break below the 50 day SMA (suggested entry), and now looks to be breaking below the triangle too. A move below 37 carries a measured move to the high teens, and this name acted poorly Friday on a firm tape. It could be a real cold Q4 for the longs, perhaps they can purchase one of the companies products to keep warm, and attempt to put a floor under the name.

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