The following is a monthly chart of Monsato, a stock which has been in a long term uptrend, but is now flashing sell signals in momentum, money flow, and trend strength. Look at the incredible bearish divergence in the PPO, which headed sideways during most of MON’s metroic rise. The DMI is signaling a change in trend. If you are not familiar with using the DMI for spoting reversal, here’s my article. The target for this trade is between $52.60, and $45.28. Mon is in the materials sector, which along with the S&P 500 is in a strong downtrend. The stop is placed just above the previous fibonacci support level of $100 at $103. Maximum risk – $23 Maximum reward – $34.72 Risk / Rewad Ratio – .66 to 1. Maximum profit – 43%

Update:

Several readers have expressed difficulties trading in this volatile market, particularly in the area of protecting profitable trades. I have thus decided to use Monsato as a live trade example of how to utilize trailing stops, a method which will help you produce more profitable trades. Here’s a link:

http://recordpricebreakout.com/trailing-stops-a-live-trade-example/

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