Is there a prize in the box?

Jan 15th, 2010 – 1 Comment

Keep an eye on the descending triangle and see how it develops. Technical indicators can help reduce risk and improve returns so lets not ignore them.


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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inventure

 

Hello Lou,

Inventure Group – Ticker: SNAK – Nasdaq.
Junk food maker. Seems like its on rebound.
What do you think?
Regards,
Allan

 

Hi Allan,

Snack foods can be a a very profitable business and Inventure Group Inc. ( SNAK NASDAQ) manages over fifty different brands so lets take a look and see if there is a prize in the box!

snak

The three year chart provides a view of the stock and I am not sure if I agree with you on their rebound. Yes the stock has come off the canvas but it has pulled back from that advance. What is evident is that the stock hit resistance at $3.00 and is now testing support on its 200 day moving average.

I also see a descending triangle pattern with horizontal support at $2.30 and a falling resistance line from the high of $3.00 in September 2009  to the $2.30 range. A descending triangle is typically a bearish pattern.  Its not a guarantee that it will continue in the downtrend but the probability is strong that it will. This puts a caution flag on the track for me.

snak2

The six month chart provides a closer view of other indicators. There is a death cross that demands your attention and the stock is meeting resistance on its 50 and 200 day moving averages.

On an operations basis SNAK has reported seven quarters of revenue and earnings growth they have  good distribution through multiple levels of retail from convenience stores to big box discounters such as Sam’s and Costco. 

The three year plan is for the company to focus on healthier natural snack products such as frozen fruit.

Keep an eye on the descending triangle and see how it develops. Technical indicators can help reduce risk and improve returns so lets not ignore them.

Happy Capitalism!

Categories: Snack Food
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