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Wait For This One Signal Before Going Long Monster Beverage Stock

Chris Tyler

Monster Beverage (NASDAQ:MNST) can be a hostile battleground stock for bullish and bearish investors alike. Now, following a period of ‘bad for your health’ criticism and bad-mouthing of shares, MNST stock is setting up to find its energetic mojo on the price chart once more. Let me explain.

Monster stock has not been ‘it’ with bullish investors of late. In the face of a terrific late-February earnings report, complete with a new $500 million share repurchase program and bubbly post-earnings bids from Wall Street, MNST nevertheless abruptly lost its fizz falling by nearly 17% to its recent corrective worst.

Behind the bitterness, a couple analyst downgrades and legitimate fears of growing competition from workout-focused energy drink beverages like Bang have certainly lent a hand. More recently, beverage heavyweight Coca-Cola (NYSE:KO) announced it’s entering this growing specialty market despite its 16% interest and distribution partnership with Monster.

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To say the least, the news has been a drag on Monster stock. But bulls in this notorious battleground stock are showing signs MNST stock could be setting up once again for a period where investors find themselves guzzling shares and enjoying bubbly price behavior on the Monster chart.

MNST Stock Weekly Price Chart

Looking at the weekly chart of MNST stock, I’ll be the first to admit the bubbly post-earnings bid looked good for continued momentum. Shares broke cleanly above pattern resistance from a double-bottom base and there was little reason to believe a challenge of the prior highs weren’t near.

I was wrong, of course. I also wasn’t interested in learning the hard way if Monster’s bullish gap would become a victim of Wall Street folklore and all gaps get filled.

Now, following the unwanted gap confirmation, I am a buyer of MNST stock if shares can rally back above $55.12 without breaking the current pivot low of $52.23. This entry represents a second attempt for Monster Beverage stock bulls to purchase shares 25 cents above the high of last week’s bottoming candlestick.

This purchase is backed by Monster shares closing in on an oversold stochastics position and price action having found support from the 76% retracement level and 200-week simple moving average. In our technical view, that’s enough evidence to consider a long position, along with what’s likely been a frustrating initial signal for other bulls and making the second entry likely a less-crowded affair.

MNST Stock Daily Price Chart

Bottom-line: Should this entry signal through $55.12 in the coming days, this MNST stock position ‘isn’t it!’ or the be-all and end-all. As the daily chart emphasizes, on top of respecting the mentioned Fibonacci and moving average-based bottom currently in place, there’s also another one of those storied gaps — and potential price confirmation we’d rather not stick around for, i.e., making us “long-and-wrong”.

Disclosure: Investment accounts under Christopher Tyler’s management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies, related musings or to ask a question, you can find and follow Chris on Twitter @Options_CAT and StockTwits.

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