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Monsanto

March 9, 2008 5:56 PM

I have mentioned many times that I viewed Monsanto as part of a building global bubble in commodities and an investment is a very risky proposition. But my posts are not about buying stocks for 10 years - it is about where the trade is currently. The importance of a potential bubble and very stretched valuation levels is that hard stops HAVE to be used. I also said to short this stock on 2 occasions where it plunged over $20 - $30 in 2 days….twice. I also strongly warned against buying it when it ran over $120 as to be long in that area it would need to clear the all time high. With that said, the key number is $93.22. If you want to be long MON, the trade is to place a buy at $95 (or wherever your risk tolerance is) with a hard stop below $93.22. it appears that this slide may try and stop in the $97 range but that trade would provide nearly $4 to the downside risk so I am not a fan of being long there.

If it eventually clears $93.22 it will spike lower momentarily - however, I would only scalp that trade short as it most likely will reverse again in the $85- $90 range.

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