Buy Fear And Sell Greed

Recently we posted a blog on the ideal time to buy gmcr — not when it popped on earnings, but long before that when the stock pulled back in orderly fashion to support.

#-ad_banner-#Just last Monday, Green Mountain Coffee Roasters (GMCR) presented investors/traders with another ideal buy point — all in the face of fear following news of the S&P downgrade.Here is what we said when we issued a trade trigger alert on gmcr last week:

“Typically events mark lows in the markets (and highs for that matter too).  Keep in mind we are not buying GMCR for today for instant gratification, we are buying GMCR because it looks close to testing its 50-day moving average and we buy fear.”

The blue circle on the chart above is where we bought GMCR — as you can see all it did was pull back to support at the green trendline and 50-day. Since that time this issue has rocketed right back up.  We like to buy fear and SELL GREED we are going to lock our gains right here and call it a day with this issue.

By buying fear and selling greed, in just 5 days, we locked in gains on strength of over 15% or $1,418 based on a 100 share position.  For the options, we locked in gains at 25.80.  We paid 13.60 giving us a $1,220.00 gain!