Jones Soda: Getting Ahead of Fundamentals

Just minutes ago I was near completion of my original Jones Soda Co. post, but my computer burped at me and reloaded my screen before I had a chance to save! That being said I will make this second post short and sweet.

The intent of my original post was to explore rational for shorting Jones Soda Co. (JSDA). To call JSDA overbought might be considered by some as blasphemy since the company is now up 130% in less than 2 months and commands a P/E of 143 vs. the industry average of 24. That being said, I am not about to step in front of this rocket until there is an obvious change in market sentiment from bullish to bearish. I believe that alarm was issued yesterday after Think Equity Partners analyst James Maher downgraded the stock to "source of funds" from "buy" and raised his price target to $26 from $17. The stock responded by shedding more than 7% on strong volume. Then last night during Mad Money, the exalted Jim Cramer proclaimed, "Yeah, I would buy Jones Soda down here." This caused shares to gap higher in early trading only to be sold off and end the session in negative territory.

An analyst downgrade followed by a failed rally on heavy volume might be the events required to alter the underlining market sentiment behind JSDA’s trend.

The next level of support($26.21) is at the 10 day MA. If JSDA can hold that level, backed by volume the trend could very well continue. Until other wise noted I will remain short.