I am not really sure how, well, incestuous the relationship is between stocks like DNKN SBUX and the coffee commodity. I recognize they have other input costs, and likely have long-term contracts locked in. However, you know as well as I do that the market often trades out of sympathy.
In other words, if coffee really is going to rally this year, note the vulnerability in both daily charts after steep uptrends. I would argue they are both short ideas on weakness.
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I thought you might be thinking of ol’ S.Bux. Agreed. JO’s rally today has been fierce. On a somewhat related note, I like the look of what DBA is doing on the weekly, but probably not clear enough yet. Eying but not ready for action…
CORN reversing higher.
Mmmhmmm. Better look than my unrequited love for SGG.
As always, no argument with the technical and trading part. As I understand it, raw coffee cost is a small percentage of the cost structure of Starbucks, Dunkin, etc. Of course this will not stop market prices (retail coffee drinks or stock) from reacting to the raw cost of coffee.
Kind of like gas station price vs. oil price- Gas station price is first up and last down. Love the way they mark up inventory produced before a spike in input cost.
Speaking of gas stations, how about the ones who slow the pump down to a crawl during the last 50 cents of a purchase? They must believe many customers will become impatient and stop early. And they think the waiting customers will put up with the delay.
Price elasticity is an interesting concept- dental floss, men’s razors and baby diapers have been determined to be well suited for price gouging.
Not mad or ranting, just a comment.