Harvesting Monsanto

 | May 24, 2013 | 7:30 AM EDT  | Comments
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Last month I discussed a buy setup in Monsanto (MON) -- a setup that ultimately triggered a buy entry after the stock hit its April 18 low into a key price-support cluster. In the proceeding weeks, this was followed by a $7.80 rally, from $101.53 to $109.33.

Now, when Monsanto met its key target at the 1.272 Fibonacci extension, that was when I suggested that you trail up stops and/or book some profits. A trailing stop should have left you with reasonable upside. Since then, the stock has declined $6.02 from the May 15 high, and I'm now seeing another potential buy opportunity as the stock approaches key areas both in price and in timing.

Looking at the daily chart, I'm seeing a standout Fibonacci price-support cluster between $102.90 and $103.29. Below that is one other area I would consider for a buy -- around $102.08 to $102.27. These support levels include a couple of symmetry projections (or measured moves) that also overlap some key price retracements.

Monsanto (MON) -- Daily
Source: Dynamic Trader

As I've also noted on the chart, the most recent decline -- into the May 23 low -- is very similar to a prior swing into the March 25 low. Both declines lasted six trading days, and they respectively brought the stock lower by $6.02 and a similar $6.04. So not only do we have price analysis supporting another buy entry in Monsanto, we also have a cluster of Fibonacci time projections that suggest that another low may be developing.

This is illustrated with the pink histogram seen near the bottom of the chart. When we see a cluster of timing cycles, the odds are higher than usual for a reversal of the trend into the cycles.

So I'll again take my buy triggers in Monsanto as long as it continues to hold above the support laid out above. I'm looking for a potential minimum upside target at the $110.97 area -- and I will consider myself wrong if the stock takes out the April 18 low of $101.53.

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