The morning has been somewhat odd. For quite a bit of trading, we saw precious metals, equities, bonds and volatility lower. Even oil dipped red for a few minutes.
It's a challenging paradigm when it flashes on the screen, because, even if it is only for a short time, it can have folks rethinking the notion of diversification. When selling hits, real selling, is there any place to hide? Today is probably just a blip, but given how the last half-decade has played out, I'd watch to see if it developed into something more.
We've seen rates so low for so long and equities continuing to rally with very little pause that when a paradigm shift occurs, it will likely be in a direction very few predict and one that transpires quickly. It's not a call for panic in any way, but a note that perhaps traders and investors should heighten their awareness of relationships and correlations into the year end.
Monsanto (MON) , a company I find interesting, is set to report tomorrow morning. It feels like most folks I know have a hate for the company or an indifference. Ironically, those I know personally who rail against the company on social media quite often are not traders or investors. I'm curious if others have encountered the same situation. Are any of the social media loud talkers actually shorts in the name? I think few, if any.
Monsanto hasn't been a big mover around earnings, normally a 3% to 5% maximum intraday move with a close within a few percentage points of the prior day. Despite the explosive debates surrounding the ethics and practices of the company, it doesn't carry over into earnings reaction. There is downside risk, though, when reviewing the longer-term technical picture of the weekly chart.
Should Monsanto find itself below $102.50, then I don't see support until $97.50. The biggest area of trading recently has been $85 to $92.50. While I don't anticipate seeing those levels post-earnings, a push under $97.50 sets us up for a sizable pullback in 2017. On the upside, $107.50 stands in the way and I think bulls will be hard pressed to make much headway above these levels.
Monsanto's setup appears to favor post-earnings action focusing on the $102.50 and $107.50 levels rather than taking a stance into the report.