10/13/2009

Is Monsanto Losing It's Touch?

I just noticed an article about Monsanto reporting about a potential Anti-trust investigation by the US Justice Dept (see this link). I then took a look at the chart, and saw an intriguing short opportunity. Perhaps Monsanto is nearing the beginning of the end of its food supply domination? I would short this around $76 with a stop above $87. Target? $20.

Notice that MON broke it's long-term uptrend, and has since been consolidating the losses. However, notice that after an initial rally to $95, it has been downtrending. This is in stark contrast to what the rest of the market has done:

You can see on the SPY weekly chart that after the first leg up, the market rested for a couple weeks. But then, unlike MON, SPY broke sharply higher. This underperformance by MON makes me more confident in shorting MON. It'll be interesting to see how this plays out.