___________________________________
To drive home a point that I have been discussing recently, the bifurcation in the market is coming to a head. Consider the risk/reward profile for allocating fresh capital on the long side to a stock like that of fast food giant Yum! Brands (home of Colonel Sanders’ KFC brand), which has not so much as closed below its 20 day simple moving average since November 2011. Even if the rubber band is not going to snap here in the form of a major, multi-quarter top, if you are a swing trader then you have to consider the ramifications of going long right here, right now over the next few weeks. Indeed, a violent shakeout down to the 50 day moving average or so should be entirely expected at this point, despite how unrealistic it seems given the perpetually drifting higher market. At the very least, the reward of short-term upside does not substantially outweigh the risk of a downside correction.
When you place a stock like YUM next to, say, chicken producing firms like PPC and SAFM, you can see which charts present higher quality setups over the next few days and weeks. Again, timeframe matters, as YUM has just seen an explosive breakout to fresh highs this year, and there is no reason to call for a generational top. With respect to swing trading, though, the safety, or lack thereof, of an entry point within the context of a given intermediate-term chart is an important factor to consider. PPC and SAFM have both consolidated their recent breakouts exceptionally well, and are much better setups to stalk on strength.
___________________________________
___________________________________
___________________________________
what do they feed chickens? any concern there in terms of increased costs?
No
Bnny
Hain