Derf, >> stay away from derivative products and leveraged bond funds <<
Sounds like good advice :o)
One conservative rule for trading is to not buy any stock that you wouldn't mind owning longer term, since you might get stuck with it if the trade goes wrong. That's the appeal of some of these contrarian / turnaround stocks like HSY. HSY is a stock that has been worthy of being a LT buy/hold, but hit problems and lost 1/3 of its value. So I figure there are several ways to play it -
1) Use the weakness to establish a long term buy / hold position
2) Take a trading position in expectation of a near / mid term rebound
3) Some combination of 1 and 2
The chart has firmed and formed a potentially bullish bottoming pattern (quasi inverted head + shoulders), and is now testing the Nov high resistance level. Once through that (assuming it makes it), then a gradual recovery up to the 200 MA area (~217) seems possible.
Anyway, seems like a fairly promising setup for either a trade or to establish a longer term position. The big question is how serious are the negative factors that tanked the stock, and how long for them to be resolved? That's where it gets tough. The chart is relatively easy to analyze, but the company's fundamentals, not so easy. Ideally you need to be a Warren Buffet or Peter Lynch, but few of us have that ability. But there were some rumors several years ago that Buffett might have interest in acquiring Hersey (see next article), and now with the stock way down, who knows? But even without Buffett entering the picture, HSY looks like a lower risk turnaround stock. On the other hand though, that's what I thought about Stericycle in 2016, and it just continued lower. That's why today I mainly stick with the S+P 500, and thus remove the stock specific risks :o)
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