On October 25, 2011 (found here), we posted Edson Gould’s speed resistance lines for Chipotle Mexican Grill (NYSE:CMG) and Green Mountain Coffee Roasters (NASDAQ:GMCR). So far, the stock price for Chipotle (CMG) has retained considerable strength in the face of extreme market turmoil. However, the situation at Green Mountain Coffee Roasters (GMCR) has completely unraveled.
On November 9, 2011, in after-hours trading, GMCR fell apart by trading as low as $44.02. If we review the [SRL] for GMCR on October 25th (found here), we can see that GMCR was trading around $64 with a conservative downside target of $59.93 and an extreme downside target of $37.21. By falling below the midpoint for the extreme and conservative estimates, we infer that the stock is destined for the $37 level at the minimum. This is the second stock in our survey, after Netflix (NASDAQ:NFLX), to adhere to Gould’s speed resistance lines.
Today we’re adding two new stocks to consider using Gould’s SRL. The first is Amazon.com (NASDAQ:AMZN) which currently trades at $211.22. As demonstrated in the chart below, Amazon.com has a conservative downside target of $117.27 with an extreme downside target of $43.98. There is a critical support level of $82.24 that should act as a buffer if AMZN were to actually fall to the $117.27 level.
The next stock that we’re watching using Gould’s SRL is Priceline.com (PCLN) which currently trades at $536.55. Priceline.com has been trading in a steady range since the beginning of 2011. However, if that range were broken to the downside, Gould’s SRL suggests that the next downside target for Priceline.com (PCLN) is $232.29 on the conservative side and $75.00 on the extreme side. A substantial support level exists at the 185.22 level which coincides with the low in the stock price in July of 2010.
Disclaimer: This piece is a continuation of the examination of Edson Gould's speed resistance line as explained in prior articles. This is not an endorsement to sell short at the current levels nor buy these stocks once falling below the extreme downside targets since the stocks have been randomly selected, at best.