Monster Beverage (chart above) got hit to the tune of 14.7% one day last month on news that the FDA is investigating a possible link to five deaths. Time will tell whether the allegations are true or not, but with the stock now trading about 50% off it’s high, wouldn’t it be nice to be able to find out about the FDA allegations ahead of time?
With the two tools below, any speculator dedicated to his daily “home-work” could have been well ahead of the news.
Tool #1: A bar chart with price and volume, no MACD, RSI or other indicators required.
Tool #2: Education, knowledge about the importance of supply and demand dynamics.
Looking at the chart above, the blue markings identify large distribution days going back to late June, it is clear that smart money has been bailing out of the name, selling on massive downside volume and increased downside volatility is a classic sign that institutions are bailing out.
Selling short, or simply getting out of a name when the “smart money” is aggressively selling is one way to be ahead of the news, one way to “hack” the system if you will.