This Monster Beverage (MNST) Trade Could Double Your Money by mid-May

Stocks carried the upward momentum from last week in to this week and all four indices moved higher on Monday. The Russell led the way with a gain of 0.67% and that much better than the others. The S&P finished with a gain of 0.37% and the Nasdaq tacked on 0.34%. The Dow was once again hurt by Boeing, but it still advanced by 0.25%.

Just as we saw on Friday, seven of the 10 main sectors moved higher on Monday. The energy sector led the way with a gain of 1.39% and it was followed by the financial sector with a gain of 1.01%. These were the only two that gained over one percent, but the consumer discretionary sector and industrial sector both gained 0.97%.

[hana-code-insert name=’adsense-article’ /]The communication services sector was the worst performer with a decline of 0.85% and it was followed by the utilities sector with a loss of 0.38%.

The healthcare sector was the third sector in the red with a loss of 0.15%.

My scans produced a third straight night of negatively skewed results on Monday.

There were 37 names on the bearish list and 11 on the bullish side.

The barometer dipped a little further once these results were added in to the equation, falling from -15.8 to -28.2.

Even though the scans were skewed to the bearish side, today’s trade idea is a bullish one on Monster Beverage (Nasdaq: MNST). The company scores an 83 on the EPS rating and an A on the SMR rating.

Monster gapped higher on February 28 after it beat earnings expectations. The stock has since pulled back and filled the gap in the chart. The $59.75 area appears to be acting as support now and the stock has turned higher over the last few days. We see also that the daily stochastic readings made a bullish crossover yesterday.

Buy to open the May $60-strike calls on MNST at $3.40 or better. These options expire on May 17. The options will double if the stock reaches $66.80. The stock will have to move above its most recent high for the options to double on an intrinsic basis, but I think it can do just that. I suggest a target gain of 100% with a stop at $59.50.

— Rick Pendergraft

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Rick Pendergraft, Trades Of The Day

Rick Pendergraft has been studying, trading, analyzing and writing about the investment markets for over 30 years. He has worked for some of the largest financial publishers in the world and he has been quoted in the Wall Street Journal, USA Today, the New York Times and the Washington Post. In addition, he has been interviewed on Bloomberg, CNBC and Fox Business News. Rick's analysis process includes fundamental, sentiment and technical analysis.