Today the market didn’t do exactly what I had expected, but Monsanto actually did. Last Thursday evening, after the market turned from a huge loss to a decent gain, I decided to sell 1/2 of the position towards the end of trading because of a recent trend of early week rallies.
On Friday, Monsanto actually had another down day, which 1/2 of our shares managed to reap the rewards from. Today didn’t exactly workout as I expected from the perspective of the market, but Monsanto did exactly what I had hoped.
Futures were pointing at a down market today, and on the open, things were definitely down. However, Monsanto was taking off. Since I had planned on entering back into the position today on a bounce, I took a quick look at the 5 minute chart throughout the day.
A significant divergence emerged between the OBV, ROC, and price, and 1:45 PM a strong sell signal appeared on the DMI. I then sold short 60 shares more of Monsanto at $75.13 at 2:15pm, as the PPO confirmed the divergence and sell signal on the DMI.
At the Close:
Below is the weekly chart of Monanto up to todays close. There are several things to note as far as the indicators and the trend:
- Today’s price action has formed a bearish Harami candlesitck pattern
- Although MON gapped up, volume was much lower today, and in the end, the bears still had control. In the last 10 minutes of trading, Monsanto went from $73.16 to $71.09 on the highest volume of the day.
- There is absolutely 0 divergence between price and any indicator in this market. Prices are going to continue falling.
- The DMI is showing the ADX just breaking above the 25 line, and the DM- is still above the ADX. We’re not seeing any signs of a trend reversal here, and the current trend is still gaining in strength
- Notice the red dotted line. We are sitting right on a level of strong resistance. Any break below $68.50 would be considered very bearish, and should allow the move to continue into the mid 50′s, which is our first profit target.
Marketclub Trend Analysis:
Marketclub Trade Triangle Technology
Below is a recap of how I’ve managed this position to date, and our profit totals.
Recap:
Opened – 10/20/2008
Open Price – $89.00
Position Size – 100 shares
10-23-2008 Sold 50 shares (1/2 poistion)
Closed 1/2 Pistion – 10/23/2008
Close Price – 74.91
Shares – 50
Profit – 50*$14.09 = $704.50
Remaining Position – 50 Shares
Total Value –
Original trade – 89*100: $8900
Buy Back – $50*74.91 = ($3745.5)
Balance from all trades- 5154.5
Now:
50 shares at $89
60 shares at $75.13
Previous Cash Balance – $5154.5
New Short Sale – $75.13*60 = 4507.8
New Cash Balance – $9662.3
Value of Original Trade – $8900
Profit – 762.3
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