NEW YORK (TheStreet) -- Keurig Green Mountain (GMCR) traded to an all-time intraday high at $158.87 on Tuesday in reaction to a re-iterated buy rating by Canaccord Genuity who raised their price target to $168 from $134.
Another factor influencing the stock is a potential post-earnings short-squeeze as 5% of the tradable float in Keurig shares or 6.25 million shares have been sold short.
Must Read: Warren Buffett's Top 10 Dividend Stocks
These influences raise the possibility that the stock will see increased volatility after the company reports quarterly earnings after the closing bell on Wednesday.
Analysts expect Keurig to earn 78 cents a share. The company has beaten earnings estimates in nine consecutive quarters and experienced price gaps higher following earnings reports released on Feb. 5, May 7 and Aug. 8. This sets the stage for a higher open on Thursday.
By definition, a momentum stock has a positive weekly chart defined by a weekly close above a key moving average with rising weekly technical momentum. Investing or trading any momentum stock should be done employing an exit strategy to lock in gains, and limit losses if a stock suffers a jolt of downside volatility.
Here's how to trade Keurig Green Mountain.
Investors in Keurig ($157.10) shares should enter a "good 'til canceled" limit order to sell strength to the Canaccord price target at $168.00, as this would lock in a gain of about 7.5%. Also employ a sell-stop below its key weekly moving average at $146.60 keeping in mind that this average will be rising each week.
If you are looking to buy Keurig on weakness enter a "good 'til canceled" limit order to buy weakness to a key technical level at $109.90.
Here's the daily chart for Keurig.
Courtesy of MetaStock Xenith
The daily chart for Keurig ($157.10) shows that the 2014 momentum run-up began from the test of the 200-day simple moving average (green line) at $68.73 0n Dec. 4, 2013. The upside to the Nov. 18 all-time intraday high at $158.82 totaled 131%. There was a 27% correction from the high of $124.42 set on Feb.20 to the low of $90.08 set on May 5. The stock is solidly above its 50-day and 200-day simple moving averages at $141.94 and $121.35, respectively.