Monster move (MNST). Time to buy, sell or short? (September 12, 2012)
MNST
Dan Fitzpatrick here at StockMarketMentor.com on Wednesday, September 12th. Today we’re going to look at Monster ( $MNST Monster Beverage Corp ). This is a stock that was included in, what one of our members called the Buzzin’ Dozen; it was twelve stocks that I thought had really good growth prospects and then I kicked this one out just because it started to act badly and sure enough it was right that I kicked it to the curb because that was around $70.00ish, something like that; and since that time the stock’s imploded. Now what’s happening here? And by the way I’m going to make a little wager with myself, the stock is not done going down at $50.00, we could see this stock going a long ways. Why? Well first of all because the federal government is talking about regulating the energy drink industry. You don’t really know what’s in those things and somehow people just decide they’re going to drink them because, well, they can buy them. They’ve got all these things in them and nobody knows a lot about what they do. Now, I’m not making a judgment on that; when I go to bars I see all these kids with the backwards baseball hats buying Red Bull and vodka so they can be a wide awake drunk, so I guess there’s valuable use there, frankly if only as a catalyst for natural selection. But the bottom line is there are a lot of reasons for this stock to be going down; you know how I feel if you have been following me at anytime or another and have tolerated my sarcasm before, you know how I feel about federal regulations and things like that. I know two things, politicians love regulations and businesses hate them. Do you know why? Because it costs money to deal with the regulations and typically, and I’m not making a qualitative or quantitative judgment here; typically it costs you money other than to regulate them, to deal with the regulations; it costs you business because you can’t do what you’d like to do; again that’s a bummer if it’s a nice thing that you’re trying to do, but it’s a great thing if you’re trying to do some bad things and the federal regulations keep you from doing that. The point is, this is a stock that had been, I could go way back and it’s even lower, but it was kind of in a gradual uptrend and then it steepend and then it steepend even more, so this was kind of like a blow off. After the stock fell down to here it never even came close to threatening this level and then it’s been off to the races on the south side ever since. I’m featuring this for a couple of reasons, first of all let this be a lesson to all of us, when a stock does this, after doing this, you don’t want to own it. You know why? Because nobody smart does, smart money is big money, big money is smart money, if big money weren’t smart money it wouldn’t be big money it would be small money. Okay, so the smart money doesn’t want this because if it did they would have gone, “Oh, buying opportunity.” Boom! Off to the races, that didn’t happen. The stock had a weak rally and then it’s been doing it again, so here’s the thing; if Monster ( $MNST Monster Beverage Corp ), hopefully it will, probably go down more from here because; guess what? Once the jackbooted thugs get their teeth into you or get their boot on your neck they’re not going to let up right away. So this stock I believe has much further down to go. A shorting opportunity is not necessarily right here, though you’d probably end up making some money. The thing you want to do is look at this trend line, you want to look at the trend line, and it will probably take it a week or two or three, whatever it is, but when the stock comes back up a little bit that’s when you fire off your short. What would bring the stock up a little bit? Short covering traders, you know it’s kind of like the Green Mountain Coffee Roasters ( $GMCR Green Mountain Coffee Roasters Inc ) thing, it goes down a lot then it starts to trickle up, it’s just a function of shorts taking profits in the same way an uptrending stock starts to drift sideways; it’s just folks that are long taking profits. So you don’t want to read too much into this, but I think Monster ( $MNST Monster Beverage Corp ) continues to be a short on any kind of strength here as long as it then shows evidence of stalling out. Okay, that’s it for this video. Members don’t forget about the Members Question and Answer tonight at 8:00 PM EST. You can get the link for that, it should have been emailed to you, you should have received it, otherwise check your Spam folder; or you can go into the Premium membership section, look at the forum, you’ll get the link there. Dan Fitzpatrick here, I’ll see you next time. Free Chart