KHC: Oscar Meyer Loser
Updated
KHC is having a rough week. The news broke on Friday that they had to write down 
15B in acquisitions from brands including Oscar Meyer. With a market cap of $58, any investor should be alarmed when a company writes down a quarter of their valuation! The largest holders of KHC are Berkshire Hathaway and 3G Capital, so anyone that followed Buffet into an earlier long play is likely kicking themselves.
This morning opened with a small upward price movement that appears to be the short squeeze from anyone holding short overnight through the weekend. The price is still dropping and will likely continue as investors who had their stop limits gapped over will be adjusting their orders top get out soon. Expect a dead cat to bounce a few times, but be certain that this is going down and wise investors will not try to catch a falling knife until the downward price action settles into a bottom and an upward trend shakes loose from the volatile swing trading to come.
Technicals are supporting this. MACD and ADX/DI flipping from bullish to strongly bearish instantly. RSI went from 58 to 15 in one trading session, and volume is spiking along with short interest. There may be a buying opportunity at the end of this once the price bottoms out, but don't try to catch this falling knife unless you want to get cut.
15B in acquisitions from brands including Oscar Meyer. With a market cap of $58, any investor should be alarmed when a company writes down a quarter of their valuation! The largest holders of KHC are Berkshire Hathaway and 3G Capital, so anyone that followed Buffet into an earlier long play is likely kicking themselves.This morning opened with a small upward price movement that appears to be the short squeeze from anyone holding short overnight through the weekend. The price is still dropping and will likely continue as investors who had their stop limits gapped over will be adjusting their orders top get out soon. Expect a dead cat to bounce a few times, but be certain that this is going down and wise investors will not try to catch a falling knife until the downward price action settles into a bottom and an upward trend shakes loose from the volatile swing trading to come.
Technicals are supporting this. MACD and ADX/DI flipping from bullish to strongly bearish instantly. RSI went from 58 to 15 in one trading session, and volume is spiking along with short interest. There may be a buying opportunity at the end of this once the price bottoms out, but don't try to catch this falling knife unless you want to get cut.
Trade closed: target reached
I took the money and ran. I still need to work on timing my profit taking on short term moves, but I got a good percentage gain from this effort.
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