Crop seed providerMonsanto (
) has been working on a base since February.
The pattern, which is a bit awkward, could be regarded as a
double bottom with handle.
Normally, the W-shaped, double-bottom's buy point is the high
of the middle peak plus 10 cents. In Monsanto's case, that would
be 83.37. However, the handle could offer an earlier entry at
For that entry to be valid, two things are needed. The market
must be in a confirmed uptrend when the stock crosses 80.42, and
volume must be at least 40% above average.
On Tuesday, Monsanto cleared the handle in sluggish volume.
The stock then quietly eased back into the handle area.
The Accumulation-Distribution Rating is B- and the up-down
volume ratio is a modestly bullish 1.1.
Monsanto received two pieces of encouraging news recently.
First, a House committee voted to let farmers use modified crops
while the U.S. Department of Agriculture completes an analysis
required by court rulings.
Monsanto and other modified seed developers have been running
into a buzz saw of legal challenges. Activist groups know they
can interrupt business with the challenges, even before the cases
are resolved one way or the other.
The next step for the legislation is a vote by the full
The second item is an Agriculture Department report released
Tuesday that said hot and dry weather will trim corn and soybean
output. A tighter supply will raise prices, indirectly helping
some agricultural-related businesses.
From 2005 through 2008, Monsanto's annual earnings growth was
25% or better each fiscal year. (The fiscal year ends in August.)
The EPS trend since then has been choppy: a 21% increase in 2009,
a 45% decrease in 2010 and a 24% pop last fiscal year.
The Street expects EPS to grow 24% this year.
The quarterly dividend is 30 cents a share and more than
doubled since '04. The annual yield is 1.5%.
Monsanto's Agricultural Operations industry group was No. 61
of 197 groups, as of Thursday's IBD. Six weeks ago, it was No.