Here’s your plan for trading Monster (MNST) on this reversal. (August 14, 2012)

by DAN MNST 
I’m Dan Fitzpatrick at StockMarketMentor.com on Tuesday, August 14th. We might as well continue our analysis of Monster ( $MNST Monster Beverage Corp ) which you can go back and look at the last week or so of free chart videos and you’ll see the analysis here. So this is that classic three-day reversal, you know you never know that the first day was here until you see the third day, but here we got a big decline yesterday, if it was upside down I think this would be like a shooting star, now it’s probably something else, I don’t know what it is I just know that the stock traded in a fairly wide range and it closed right near the open, right in the middle of the range; so it was classic indecision there was no continuation of the downtrend, there wasn’t a big snap up there was just sideways trading; so neither bull or bear got the better of the other one; then comes today, trading volume heavier than average, heavier than yesterday’s little moment of indecision and today the stocks up to a new three-day high meaning it’s higher than here and here. So now what do you do? Does that mean it’s time to buy the stock? No, the time to buy the stock, if you want to trade, is down here with a tighter stop. Now what I’m suggesting is that you recognize this for what it is, it’s a snap-back short covering maybe there was a bit of news that came out, I don’t know, but I know that this down trend is intact; you look at the weekly chart and you can see what’s happening here. Look for this stock to perhaps get a little more upside, but I think if it gets anymore upside at all you are more likely to see the stock rollover and continue on its downtrend than you are see the stock continue to move higher; I doubt that it would even reach the 50 day moving average for the simple reason that there’s too much damage to this stock, the price action is so bad that I just think there’s a lot of traders that aren’t going to touch it, particularly, and this is important, momentum traders. The momentum and traders, which are the last strong group of traders into a stock, the momentum traders pretty much left this stock right around here; this took out the rest of them now this is in my view just short covering so be careful about this don’t get enthused about it, don’t get fixated on it, instead treat it like any other stock, look to sell into strength. Okay members; get over to the Strategy Session.

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