Krispy Kreme Donuts (KKD) has been in a multi-year consolidation and is finally getting some frosting for new highs.
GAP REVIEW
On November 20, 2012, KKD gapped up on earning guidance. KKD pushed through prior supply over $8.75. If KKD can maintain this gap up, it should start to lift into higher prices.
KEY LEVEL
Any price move maintained over $9.50 is considered bullish. KKD may try to revisit its previous highs around $10.00 and even into $13.00.
THE TRADE
Two possible entry ideas:
1) Watch for a pullback into daily demand at $8.50. Keep a tight stop under $8.00 and look for it to build demand to climb over $9.50.
2) Buy any price action over $9.50. Look for targets into $10.00 and then $13.00.
[Editor’s note: Peterson has been on a winning streak lately for his stock picks, most recently nailing a Yahoo trade. Learn more about his trading approach here. Do you trade gaps? If you’ve got questions or comments for Peterson post a comment below.]
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Read more trading ideas here in our daily Markets section.
Strategy article: Learn how to profit from the opening gap.
