CHOCOLATE: The Drug That Humiliates and Shames – Before it Kills! (HSY)

Today’s trade is based on the western world’s greatest poison – the sweet KISS of death – from the murderous horde of Hershey, Pennsylvania.

Yes, the KISS.  Produced by Hershey Co. (NYSE:HSY) at a rate of 70 million carcinogenic units per day!

Unbelievable.

We ran this sucker for a profit of 873% back in the summer of 2019, and our blood-sugar has been jumping ever since.

In any event, it’s now time to mobilize all our pancreatic juice in the fight against obesity, diabetes, cancer and all totalitarian political tendencies with a down-side trade on HSY.

But first, the fundamentals –

• HSY carries a heady P/E ratio of 25.66 – high for a legacy industrial operation,
• A Dividend Yield of 1.87% – strong, in fact, in this environment,
• A Price to Book ratio of 15.85 – which should make the skin of every healthcare professional go acnoid, and
• A sky-high Debt/Equity ratio of 2.00.

All of which makes you wonder why the CDC and WHO haven’t issued one of their typical, hysterical press releases against the gene mutators at Hershey’s.

No argument there.

We don’t like HSY.  We don’t like the CDC.  And we don’t like the WHO (with apologies to Roger Daltrey).

All three, in our eyes, are killers.

And they deserve the come-uppance that will shortly come their way, G-d willing.

Enough of your anti-vaxx histrionics, Matty!

Hear, Hear!

On to the chart –

The technical low-down’s like this –

1. First, RSI has sunk below her waterline (in green) after diverging from price for better than a month (light blue, at bottom).  Both those indications are strongly bearish.
2. But once MACD confirms by submerging below her waterline, we’ll have a full-on SELL signal, as the bears will have proven themselves unequivocally in control.  That hasn’t happened yet, but if current weakness continues, we’ll likely see it by the weekend.
3. In the meantime, price has broken cleanly below a four month trend channel (in red), while
4. The short-term moving average begins its roll lower (in blue, at top).  That effectively puts a lid on price at $173.50.
5. Important to note, too, the dearth of volume at the top (squared, in black), which bespeaks a lack of commitment on the part of the bulls.
6. Next support comes at HSY $158 (circled, in black).

And it’s for all the foregoing that we now offer the following, wrapped exquisitely in silver foil –

A Jew and His Gold recommends you consider selling the HSY November 19^th 170/175 CALL spread* for a credit of $1.40 (6.80/5.40), and buying the HSY November 19^th 175/160 PUT spread** for $7.00 (10.70/3.70) .  Total debit on the trade is $5.60.

[*Sell the 170 and buy the 175. **Buy the 175 and sell the 160.]

Rationale: We’re laying out $5.60 for a potential maximum profit of $9.40 – thanks to the CALL spread covering part of our PUT spread debit.

Maximum loss on the trade is $10.60 (difference between CALL strikes PLUS initial debit).

Hershey looks overly sweet at this stage and a decline to the 158 level – to begin – would go a long way toward insulinizing the stock for a new move higher.

We’re committed to it.

May the G-d of Israel actualize it.

Many happy returns,

Matt McAbby

Follow @HughLOHaynew