One of the earnings trades that didn’t go exactly as expected this season was $MNST. A growth name that had been slowing a little and then missed its numbers. It got punished heavily for it. Well, there also was that little thing about a subpoena the next day that just kind of piled on pushing the stop down even further. It looked dire for the position I have, but was certainly getting stretched to the downside which to me was shifting the risk to the upside. It was hard to know if I was seeing things clearly as I was sitting on the heater here effecting my bias. I came in this morning with it on the top of the “to deal with” list and by the end things were much clearer. $MNST closed with a textbook Morning Doji Star pattern.
I told you it was textbook. It is a pretty solid reversal signal in my experience. Now this certainly does not mean the stock is out of the woods, or the longer downtrend is reversed; but it does suggest the selling pressure has exhausted for now. Buyers even showed up to help as the day went on. The next few days should solidify or nullify the pattern so keep it on your radar.
(All market data above are derived from Stockcharts.com, Esignal, and Reutersdatalink)