What’s Up With Monsanto?

July 30, 2014 8:12 AM

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What’s Up With Monsanto?

This $60B company has been trading very poorly for the last few weeks. The stock has closed lower than the opening print for the last 18 sessions, the longest such streak since 2000.

After reporting better than expected Q3 earnings and raising their guidance, it’s recent weakness is somewhat of a head scratcher. Perhaps the recent debt offering to buyback shares is the reason why the street has scorned Monsanto in recent weeks.

Another possibility I had considered was that it had something to do with weakness in corn prices, but after looking at the correlations, we can see that there is nothing consistent there for the last few years. Just because corn and Monsanto are concurrently going lower, we know better than to confuse correlation with causation.

Monsanto has been the strongest Ag stock over the last few years and has spent very little time below its 200-day moving average. As it approaches that mark on heavy volume, it will be interesting to watch how this stock acts over the next few weeks and months.

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