February 14, 2011

Sweeten Up Your Valentine's Day: The Hershey Company (HSY)

Happy Valentine's Day everyone! I know you guys want to kiss those who you like and I know there's something more on your mind. If that's the case, for the receivers, take it as a compliment. Since it's the day of hearts, let's tackle something sweet and my best choice is The Hershey Company (HSY) who manufactures chocolate and sugar confectionery products worldwide. I'll tell you why shortly.



Few other choices that I looked into that fit today's theme were Rocky Mountain Chocolate Factory, Inc. (NASDAQ:RMCF), 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS), Tiffany & Co. (NYSE:TIF) and Blue Nile Inc. (NASDAQ:NILE). However, among them all, Hershey's got the sweetest stock chart. So if you want something easily accessible, you have the chocolates! The bottom line, everyone likes and expects chocolates for Valentine’s Day and historically speaking, the stocks of Hershey's tend to give favorable results after the “love-filled” day. You might want to check its historical data yourself.


The last time I posted my technical analysis on The Hershey Company (HSY) was last June 24 (here's the post) and before that was June (here) and May (here). I know it's been a while so thanks to Valentine's Day that I was able to chance upon it again. Looking at the 5-year chart of one of my stock picks, a large cup and handle pattern has formed after it broke out from an inverted head and shoulders pattern. However, what I want to highlight is the 8-month rectangle pattern forming (could look like a triangle for some). This is most likely a bullish continuation pattern since the overall bias of the trend is upward so the chances of this rectangle being a continuation pattern is higher compared to being a reversal. At the same time, the MACD is above 0 and the stock price is moving above the 100 and 200-day moving averages that add up to the bullishness. Anyway, if the over-demand of Hershey's chocolate products trigger the rectangle breakout, my target price is set USD56.75 in the near term. However, before it reaches that level, it firsts needs to breach the $53.48 resistance. Though, once in a while we don't get what we expect and if Hershey's breaks down from the rectangle's support and gets our hearts broken which I hope not, the next significant support could be the 2-year uptrend.

No comments:

Post a Comment