Monster Beverage – MNST Stock Could Be Headed for Multiyear Highs

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The stock price of energy drink company Monster Beverage Corp (MNST) traded higher Thursday on the back of positive comments by Wall Street analysts. But bigger-picture, MNST stock has been acting constructively for weeks now, and after Thursday’s move, Monster looks ready to tackle its June 2012 highs over the coming months.

stock picking advice beat the bellAnalyst initiations, upgrades and downgrades can move a stock’s price, often meaningfully so. However, trading strictly on the back of analyst comments can be a tricky strategy, particularly during times of heavy news flow around any given company.

Over the past decade-and-a-half of trading in equities, I have found that some of the best probabilities of success in trading stocks on the long side of analyst comments take place when…

  1. General news flow around the company is quiet;
  2. A host of analysts slowly and quietly begin to turn bullish or more bullish on a stock; and
  3. If this also corresponds with a constructive look of the charts.

Monster Beverage currently falls exactly into one of those constructive scenarios. During the past few weeks, we have seen a constant drip of positive comments, stock initiations and upgrades from banking and brokerage firms on MNST stock. From Credit Suisse and Jefferies to Wells Fargo and BTIG, all of them had positive things to say on the company and that has also been confirmed on the stock’s charts. (The latter initiated coverage on MNST on Wednesday, rating it a “buy” and giving it a $90 price target, or 25% upside, saying the consensus is too negative on the company’s growth prospects.)

MNST Stock Charts

Looking at the multiyear weekly logarithmic chart, MNST stock continues to hold its big uptrend line. Since late 2012, Monster also has been working higher in an orderly channel.

MNST stock chart daily
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On the daily chart, MNST stock formed a great-looking double bottom/support in mid-April, then again in early May at its flattening 200-day simple moving average (red line). The stock then quickly jumped higher in early May, in the process breaking past its diagonal resistance line dating back to the February top, and then again began to settle into a multiweek consolidation pattern.

This latest consolidation pattern took place in the shape of a higher base, which also held the 50-day simple moving average (yellow line) as support. This week’s rally in MNST stock has broken shares out of this higher base, and that — viewed through a multimonth lens — looks to be conducive for a move back to the June 2012 highs in the high $70s.

MNST stock chart daily
Click to Enlarge

Active traders and investors can now use this week’s lows in the high $60s as a base to trade against on the long side, using a trailing stop play the stock into the high $70s (but use a trailing stop).

Monster Beverage doesn’t announce its next earnings results until early August, so there’s at least no major scheduled news event in the offing anytime soon.

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Download Serge’s trading plan in the Essence of Swing Trading e-book here. As of this writing, he did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2014/06/monster-beverage-mnst-stock-charts/.

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