Is writing about Monster Beverage (MNST) right after Halloween like covering Hershey (HSY) right after Halloween -- when sales of chocolate best Easter and Valentine's Day? Of course it isn't, but maybe it got you thinking for a second.
A sweet tooth may also be involved, but the reality is that the consumption of beverages has a much different pattern than our favorite food group. Speaking of patterns, let's actually look at the price patterns for MNST.
Looking at this daily chart of MNST, above, going back twelve months we come away with a mixed feeling. While prices are holding steady around the $145 level, they are below the declining, 50-day moving average and have been crisscrossing the flat, 200-day average.
During the past two months, as prices moved sideways we can see the On-Balance-Volume (OBV) line weakening. Sellers were more aggressive, as MNST declined to $145 from $165. Prices made equal lows in September and October while momentum made a higher low. The rising momentum reading is a plus for the market, as it shows that the pace of the decline has slowed. In the short-run MNST needs to close above $153 to catch a bid while a close below $141 is likely to precipitate further declines.
In this three-year weekly chart of MNST, below, we can see both a "double" for MNST from the 2014 lows and a possible broadening pattern over the past two years. Zeroing in on the more-recent price action, we can see that MNST is trading just below the 40-week moving average line. The weekly OBV line has been pointed down for the past three months and the MACD oscillator is slipping below the zero line for an outright sell signal.
Strategy: It might take a couple of closes above $165 to signal a breakout on the upside for MNST. On the downside a weekly close below $120 will bring the bears out.