Farmer Brothers' Meteoric Monday Rise

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Farmer BrothersFARM
opened to a forceful increase on Monday morning; rising as much as 27% from Friday's close. The price leveled out mid-day to stabilize around a 19% increase near $11.50. The company is presently celebrating its 100th year of distributing coffee, in a history that has seen in become one of the preeminent specialty coffee roasters in the United States.
Farmer Brothers
roasts, packages and distributes coffee as well as selling tea and culinary products. Last year the company saw record sales, and it may be that its anniversary celebrations are drawing attention to its outstanding performance over the previous fiscal year. In current conditions, the display of strong sales is a relief to investors, and can attract new shareholders. The rise in share price did not seem to correlate with any rise or drop in coffee prices or any drastic changes in market conditions. Farmer Brothers' market performance Monday was far more positive and volatile than any of its competitors, with only
Coffee Holding Co.JVA
coming close, with a 10% increase from $26.75 to $29.32. Technical analysts may be predicting a drop, characterizing the rise in the stock as a bubble ready to
burst
. Should this trading thesis gain momentum, there may be a significant push to short the stock in coming sessions.
ACTION ITEMS:

Bullish:
  • Share prices may still continue to leap throughout the day. A careful eye could pay off as the day goes on.
Bearish
  • At this point, that stock price seems to be decreasing from an earlier high. Without obvious cause for the high, it is possible that the stock is adjusting back to normal after a rally caused by buying.
  • If Farmer Brothers gains significant capital from this rally, its competitors might see themselves pushed around in their market.
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