Not sure if you saw my post the other day about both JVA and COFFEE staying above the 50 day moving average. In JVA's case, it's bouncing off the 50 day MA and it is a bullish sign. Just by looking at the chart, the blue line is what I've been looking at to judge the health of a particular stock. Notice how JVA bounced nicely today off the blue line and that is serving as support. Generally, a stock above the 50 day MA is considered technically healthy.
Here is the chart:
After JVA reported Q2 earnings in June 2011, the stock went up 128% in 9 trading days. Not saying that will happen again but I personally expect them to report higher margins due to a sizable unrealized gain due to their hedging activity.
Even though coffee's gone up some 80-90% in 2014, it is still well below all-time highs. Considering the worst drought in Brazil (40% of world's coffee production) in 50 years and the troubles in other growing areas, combined with the fact that consumption continues to rise, it is likely to expect coffee prices to reach new all-time highs well over $3 when all is said and done.
No way of knowing. The market makers can cause a short squeeze to happen any time they want. A lot of traders have JVA on their watchlists and as soon as the price starts to go up on volume, they will buy back in. This is the reason I've been saying the Nasdaq index needs to stabilize and start going back up. If JVA goes up 10%+ in a single day on no news and the rest of the market is down, it sticks out like a sore thumb.
I noticed a lot of beaten down internet names started to go higher today after getting crushed recently. AMZN, NFLX, PCLN, TSLA, etc. That means the risk-on trade may be back on and if that's the case, I expect JVA to go back up with those names as well.
The quarter ends....actually, tonight at midnight. By law, they have to report 45 days after the quarter ends which is no later than June 15th.
JVA gets beaten down pretty hard on ridiculously low volume, as is the case again today. When the markets are floundering, which Nasdaq has for the past 6 weeks, JVA is susceptible to short sellers beating it lower on very low volume. JVA doesn't release a lot of PR so other than quarterly earnings, there's not a lot to drive the price higher when the overall market is struggling to find it's own direction.
I think a lot of people are waiting for (a) the next quarterly report to see how earnings respond to higher coffee prices and/or (b) coffee prices to resume a solid uptrend since it's still near the March highs.
JVA is extremely cheap right now. There's a reason why there was so much buzz after their last earnings report which was excellent and the price of coffee is about 80% higher today that it was at the end of the Q1 report. That fact has been more than discounted.
I don't know if the Vietnamese coffee growers are doing this on purpose to make the situation worse and force coffee prices even higher but the timing sure seems like it.
WALL STREET JOURNAL
By Vu Trong Khanh
April 29, 2014 7:13 a.m. ET
HANOI—Vietnam plans to uproot as many as 95 million old coffee trees in its first systematic replanting program, a process that would make coffee scarcer in the near term, as well as cutting future years' exports.
The news comes as a drought in Brazil, which produces about one-third of the world's coffee and more than half of the arabica beans used to make higher-quality and gourmet coffee, has shriveled crops. Prices have risen to multiyear highs.
Now Vietnam, the top producer of robusta beans, is forecasting a big drop in its next harvest, and harvests thereafter, because aging plantations and dry weather could cut yields. Adding to the uncertainty is the El Niño weather cycle, which has the potential to further erode output in Vietnam and Indonesia, another major producer.
Vietnam's robusta output in the 2014 to 2015 crop year, which starts in October, likely will be 15% to 20% below the current crop of an estimated 1.3 million metric tons, Nguyen Viet Vinh, general secretary of the Vietnam Coffee-Cocoa Association, told The Wall Street Journal. Exports this crop year are likely to be lower than in the 2012 to 2013 crop year.
We are planning to undergo a long-term process of replacing old coffee trees, and this, together with the current dry weather conditions, will hurt coffee output," Mr. Vinh said
"A strong El Niño would have negative implications for the 2014/15 coffee harvests in Vietnam and Indonesia (which together account for nearly a quarter of global output) perhaps suggesting prices will stay higher for longer than we currently forecast," Capital Economics said in a recent report.
Actually, the opposite happens. The majority of the coffee crops are in southeastern Brazil which typically receives monsoonal rains during an El Nino event. However, during the summer months, coffee growers want conditions to be dry during the harvest. So if an El Nino hits and Brazil gets heavy rains, then this entire year is turned upside down. Coffee growers want heavy rains during the winter but they just had the worst drought in 50 years....and no rain during the summer, but El Nino would cause them to get too much rain. This would cause trees to drop coffee beans prematurely and the quality of their coffee is already poor and lessened due to the drought.
JVA's CEO has said twice in the past few weeks:
" With coffee prices now on the rise again, we believe the combination of higher commodity prices along with continued growth in our overall business should result in increased revenues." -- CEO Andrew Gordon
"Hedges are needed to help minimize risks. We have problems when (coffee) prices fall quickly but tend to benefit in times of rising prices (or at least market stability)." -- CEO
In the past, like 2011, coffee prices rose dramatically as did JVA's stock price but coffee prices fell just as quickly. What investors need to realize with JVA now is that the worst drought in 50+ years has caused damage to the trees that will take years to get back to normal. The CEO is implying that JVA does it's best when coffee prices rise and unlike 2011, I don't see a fast spike then fall because damage to the coffee crops will take years to get back to full production.
I've been loading up on JO and doubled down today when the price was way down. Then it had a sharp reversal up. Here's a trick I use since I know that there is no reason coffee should break down technically. Look at this chart and the price will almost assuredly stay above the blue line (the 50 day moving average).
Note: Same thing for JVA, replace $COFFEE with JVA and you will see that JVA is also bouncing off the 50 day moving average. Since both coffee and JVA should be in firm bullish mode, staying above the 50 day MA is a healthy indicator...and one that I'm using to gauge whether to buy even more when it gets close to the line.
"JVA has problems when coffee prices fall quickly but tend to benefit in times of rising prices." -- JVA CEO, April 24 2014
I'm a chart guy and in the past 20 years, there's only been one other time that coffee prices rose nearly as quickly as they have in 2014. That was back in 1997 when coffee prices shot to near $3/lb. Not coincidentally, that was also the last time the world had a "Super El Nino". Scientists are saying the El Nino this year could be of epic proportions rivaling or even surpassing 1997's event.
A Super El Nino event would cause a deluge of rain in South America when the coffee harvests benefit from dry weather. This is setting up to happen after the worst drought in Brazil in the past 50 years which would cause further crop damage and disrupt the harvest at at time when the world is already facing shortages. Also, coffee demand is much higher than it was in 1997, especially outside the US. This is setting up a potential perfect storm of high demand/low production and coffee trees will take years to fully recover so the looming coffee shortage could last a long time.
JVA's earnings are better when coffee prices are either stable, or especially when prices go higher continually. That is where we are today. In the past, like 2011, coffee prices spiked but immediately fell. I would be surprised if prices fall below $2 for the rest of 2014 (if they do, it will be brief).
Much will be learned in the next 1-2 months. Weather models that are detecting a monster El Nino will know for sure by the end of May or early June whether a significant event is about to occur. Also, the harvest in Brazil will also occur in May which will give everyone a better idea about how much damage has been inflicted to the crops and the quality of the beans. Though, every coffee expert that has recently toured the coffee growing region in Brazil has revised their production estimates lower.
This is what I expected, as Starbucks has a large inventory of coffee beans. However, they are halting purchases in hopes that prices will go lower. This is a MAJOR miscalculation in my opinion as the coffee crisis will only get worse and prices today will seem cheap in a few months. Here's the story:
" The worst drought Brazil has seen in fifty years is pushing coffee bean prices to new heights. As a result, Starbucks, the largest coffee company in the world, has halted coffee purchases over the past few weeks, the Wall Street Journal reports.
Brazil is the world’s largest producer of coffee. Arabica coffee futures, the most common bean variety sold in the US, have soared nearly 90 percent over the past year, and reached the highest price in two years on Tuesday. The surge was prompted by estimates that Brazil’s arabica crop, which was decimated by this year’s drought, will miss expectations by 18 percent. Overall, the world’s harvest is expected to fall short of demand by 11 million bags, — meaning coffee lovers may be forced to pay more for their morning cup.
Besides destroying coffee crops, the prolonged drought has wreaked havoc on Brazil’s water and electricity supplies. Now, the nation is bracing for El Niño, which promises an epic downpour that will be even worse for bone-dry coffee plantations. Some regions may lose over a third of their crops.
Starbucks’ head of coffee told the Wall Street Journal the company has no current plans to raise prices, and is simply waiting to see if the price surge will subside. But if prices stay at their current exorbitant levels, Starbucks — and their customers — may have to accept a new normal
April 26, 2014
"Brazil is the world’s largest producer of coffee. Arabica coffee futures, the most common bean variety sold in the US, have soared nearly 90 percent over the past year, and reached the highest price in two years on Tuesday. The surge was prompted by estimates that Brazil’s arabica crop, which was decimated by this year’s drought, will miss expectations by 18 percent. Overall, the world’s harvest is expected to fall short of demand by 11 million bags, — meaning coffee lovers may be forced to pay more for their morning cup.
"The last thing we want now in the harvest is rain," said Mauricio Miarelli, 60, a grower from Campos Gerais, in southern Minas Gerais, where some of his beans already are only good for making instant coffee. "If we get El Nino and rain, the quality and output will drop significantly."
Besides destroying coffee crops, the prolonged drought has wreaked havoc on Brazil’s water and electricity supplies. Now, the nation is bracing for El Niño, which promises an epic downpour that will be even worse for bone-dry coffee plantations. Some regions may lose over a third of their crops."
I have watched FPP for YEARS. The last time it had this kind of continuous heavy volume was in late 2011/early 2012 after the stock plummeted to $1.75 then rose to $6.00 in 5 months. The time before that was the oil superpike in 2008 when oil reached $150/bbl and FPP went parabolic...although today's volume pales in comparison to back then. Judging from the warrants, however, this is a BFD (as you call it). Something very big is going on, this is much more than a single well and I can't believe even a good earnings would generate this kind of sustained interest.
Stevens made a proposal back in November and this more likely than not is related to some kind of merger/acquisition or even privatization by a PE firm. My guess judging by recent trading activity is the buyout offer will be in excess of $7, I'm hoping for $8 or higher. I would be surprised if this trading is caused by anything other than some type of M&A deal.
By the way, my AAPL $550 calls went up 750% just this morning! Not bad since I bought them only 3 days ago. Sold them.
43K shares traded by 11:15am EST? Now $1.37. This has to be more than the IBD. Wonder when the public finds out about the buyout? Shouldn't be more than another week unless negotiations aren't finalized yet.
AAPL will likely be listed on the Dow after the split since it's weighted by share price. That will increase institutional ownership substantially. With buybacks continuing and the iPhone 6 probably the largest launch in corporate history coming up, this stock continues to get cheaper and cheaper. Now FINALLY Tim Cook has a positive surprise which emboldens investors to take long positions whereas before, the stock went down almost every time he spoke. This nice upside surprise to earnings also makes people think he is sandbagging on guidance so they will price in higher earnings.
It's about time.
PKD needs to get above $7.26 or risk the opposite of the golden cross, namely the death cross. However I think you're in good shape, it has a healthy looking chart off of it's bottom. I see one thing on MXC's chart that looks like it can have a very big spike at any moment....starting as early as tomorrow. Last time it had a similar setup it went from $6.40 to $9.40 in a single day! That's what I'm expecting again.
I had some AAPL $550 calls so they should go up anywhere from 400-700% tomorrow off earnings/split/buyback news all at once. Wish I had loaded up on those more than I did but will still be a nice day tomorrow. Hopefully the whole market will be in celebration mode, certainly the NASDAQ index will be flying with some big name tech beats. I'm also buying calls in JO (the coffee ETN). Coffee is about $2.12/lb and is forecast to go over $3.00 and perhaps higher due to a looming coffee shortage later this year/early next year. And with a strong El Nino forecast to hit this summer, certain commodities in general will be flying high as the global weather is thrown out of whack.
Wonder if the FPP rating on IBD is behind the recent surge or if it's something insiders know?
Looks like the MM's are playing games here but FPP is showing really good strength. MM's (or somebody) keeps offering pretty sizable blocks for sale UNDER the current market price and when that price is hit, they lower it some more. But somehow, FPP blasted through all that today despite falling oil prices and those games. Impressed so far.
The situation really hasn't hit mainstream media so it's flying under the radar. Part of the reason is Dunkin Donuts and Starbucks keep a large inventory of coffee beans...I've read that in the case of Starbucks, they have an inventory that would last a year. But they can only hold off buying for so long.
Very soon, the looming coffee shortage will become very well known. McDonald's will likely be first, they will have to cancel their free coffee program. Then Dunkin and Starbucks will announce price increases but apologize.
The global forecast is for demand to outstrip supply by 11 million bags of coffee this year. That will cause coffee inventories around the world to reach dire levels. Since next year is forecast to be even worse than this year since the tree damage that was caused by the drought takes years to heal, the surge in coffee prices will likely be historic....and prolonged. That's what happens when you have the worst drought since records were kept followed by a monsoonal El Nino which is likely to occur.
If JVA plays their cards right and hedges properly, their earnings should skyrocket. I think that will happen because unlike past years when coffee prices spiked and fell just as quickly, I see prices going high and staying high which should increase revenues, and earnings, significantly. JVA could go parabolic if that happens, as it should.
SINGAPORE — An El Nino will probably start as soon as July, according to the Australian government forecaster, strengthening predictions for the event that can affect weather patterns worldwide and roil commodity prices.
Disruptions associated with El Ninos have been most important for palm oil, cocoa, coffee and sugar, Goldman analysts including Jeffrey Currie wrote in an April 13 report. An El Nino would boost risks to soft-commodity price forecasts, they wrote.
April 20, 2014
The Hackett Money Flow Report: Commodity Market Analysis for Hedgers and Investors
"I continue to reiterate that this [coffee] is a bull market of a lifetime and should see a parabolic advance emanate in the months ahead that should set all time new highs with ease."
"We will have to ration at least 9 million bags of coffee demand to get through this record supply scarcity issue. This means that prices need to move up now to get ahead of this looming coffee supply conundrum. With McDonalds giving away free coffee and with Starbucks lowering prices we have yet to ration any demand yet. We had better hurry up. The longer the market takes to ration demand the worse the situation will get and the higher prices may go especially if Vietnam has El Niño induced coffee production problems.