monster beverage corporation us mnst potential bullish reversal above 121115 62 support 1117702015

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U.S. shares highlights

After yesterday’s “Black Monday” sell-off in global equities, we will start to examine the equities space in greater detail to source out for interesting ideas.

Let us start with the U.S. stock market and one of the sectors that I am expecting to outperform the broader benchmark S&P 500 from a multi-month perspective is the Consumer Staples (XLP) as per highlighted in my Q3 2015 Global Markets Outlook.

Today’s focus will be on Monster Beverage Corporation (MNST), a key stock in the Consumer Staples sector

Key elements

• Since the low of 27 October 2008, Monster Beverage has been trading in a bullish dynamic as it continues to evolve within a long-term ascending channel (see weekly chart).
• The recent steep decline of 26% from its August 2015 high of 155.50 has managed to stall yesterday at the median line of the long-ascending channel at 121.00 (see weekly chart).
• The 121.00 support (median line of the long-term ascending channel) also confluences with the 23.6% Fibonacci retracement of the on-going long-term up move from 27 October 2008 low to the 03 August 2015 high (see weekly chart).
• Current weekly candlestick has formed an impending bullish “Hammer” candlestick pattern at the 121.00 support which suggests a potential bullish reversal scenario after last week steep and swift decline. The low of the “Hammer” stands at 115.62 (see weekly chart).
• Interestingly, yesterday’s recovery in price action has occurred at the key 200-day Moving Average (in orange) (see daily chart).
• The intermediate term Stochastic oscillator has flashed a bullish divergence at the oversold region which suggests that the current downside momentum has abated (see daily chart).
• The next significant resistance stands at the 211/231 resistance zone which is defined by the upper boundary of the long-term ascending channel and a Fibonacci projection cluster (see weekly chart).
• Elements display in the relative value chart of “Monster Beverage  / S&P 500” still advocates for an outperformance play of Monster Beverage against the benchmark S&P 500 (see last chart).

Key levels (1 to 3 months)

Pivot (key support): 121.00/115.62

Resistance: 155.50, 211.00 & 231.00

Next support: 83.00

Conclusion

Technical elements suggest that Monster Beverage has fallen to a significant juncture. As long as the 121.00/115.62 pivotal support holds, Monster Beverage is likely to see a potential bullish reversal to retest the 155.50 August 2015 high before targeting 211.00 and even 231.00.

On the other hand, failure to hold above the 121.00/115.62 pivotal support, Monster Beverage is likely to see the continuation of its correction to target the next support at 83.00 (also close to the lower boundary of the long-term ascending channel).

Source:  Charts are from eSignal

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