After reporting its fiscal fourth quarter earnings, agricultural products firm Monsanto Company (MON) saw its stock price drop about 1% on the day. The company reported a quarterly loss of $249 million, which was slightly worse than the $230 million loss in the same quarter one year ago. The company also guided its fiscal year 2014 earnings to be between $5 and $5.20 per share, shy of the $5.31 that analysts had estimated.
While Monsanto’s earnings report had a slightly negative tone to it, the stock through the longer-term lens looks to be just fine.
Like the broader U.S. stock market, Monsanto is holding its November 2012 uptrend well intact, and each test of said trend line seems to set the stock on a path to higher highs. From its last test of the November uptrend, the stock rallied 15% in a matter of four weeks to a marginally lower high versus its May top before consolidating into the earnings report. The August-to-September rally also broke the stock past a multimonth diagonal resistance area as well as its 100- and 200-day simple moving averages, which offered traders a nice setup for quick cash flow.
On the daily chart, yesterday Monsanto bounced from a technically relevant near-term confluence support area. After the steep and quick August-to-September rally, the stock was due for a breather, and the broader market environment as well as its earnings announcement was just the excuse to do so.
The earnings announcement led the stock to open down close to 2.50% on Wednesday, but the stock found its intraday low within the first 15 minutes of trading and proceeded to bounce. The intraday lows near $101.80 coincided with the stock’s 100- and 200-day simple moving averages — a lateral reference area, as well as the 50% retracement of the stock’s August-to-September rally.
Traders looking for immediate upside could use Wednesday’s lows to lean against, while investors needing more confirmation could wait for a follow-through buying day to further solidify Wednesday’s lows as important.
Serge Berger is the head trader and investment strategist for The Steady Trader. Sign up for his free Weekly Market Outlook Video here. As of this writing, he did not hold a position in any of the aforementioned securities.
