Prepare to be Fertilized
Tuesday, November 17, 2009 at 03:20PM That's not what I meant.
A broad based accumulation of Agriculture stocks took place today. What started off as decent gains in the group transformed into a surge in price action on heavy volume. What's even better is that I'm not seeing any big news behind this, aside from the typical Cramer pump, a rise in inventories, and other general headlines. Looked to me like straight up accumulation.
From a technical perspective, this move is significant. Agriculture stocks have not participated in any of these recent rallies in stocks. They've been dead money for most of the year. However, today's price action, in my opinion, changes all that.
Now, I try to weed out the Ménage à trois going on between CF, TRA, and AGU and have paid much more attention to POT, MOS, MON and even IPI. You might be thinking about the Agribusiness ETF, MOO and might be finding yourself thinking that the Ag stocks are just fine, especially with the MOO reaching new highs today. I disagree. Besides, that ETF doesn't measure Ag stocks alone, it mixes in stocks like DE, ADM, PDA, etc.
Looking at the technicals, POT broke free from an important trading range today, leaving it fee and clear to test this years highs. POT is by far the relative strength name in the group, and still shows great upside potential from here.
MOS broke out of an important consolidation pattern. One that has kept the stock on a sell signal for quite some time. The 200 day MA has kept the stock alive, and as of today, has broken free from this month long consolidation.
Not to mention, this print of $52 coincides with a buy signal.
MON and IPI are still lagging a little and remain on a buy signal, but the daily charts look lovely. MON has broken its bearish channel, and IPI appears to be forming bottom, yet to confirm a breakout.
This move could be significant, and at this point its still early. In other words, its not too late.
In closing, I am long agriculture. Are you?
Long: Fertilizer, Fertilizing Accessories, and the Process of Fertilization.
Short: Not much.
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Response: You've Been Fertilized!Did you sell your agriculture trades today for 300% returns? I did! Well, some of them anyway. I only
Reader Comments (13)
LOL. Man, that title is funny. : D
Always enjoyed your writing style. Good stuff.
Eddie
Woww this is what the blogging world has been missing- Great Post OA!!!
We should keep our eyes on the machines which look due for another rising - Transformer Style. My 3 favorites that we have been discussing go as follows. CAT and ITW both have a cup and handle patterns on their daily charts. You can see the two are each at different stages. Then, there is the runaway train BUCY which appears to be consolidating in an ascending triangle pattern on its 30 minute chart. This one could be waiting for a short-term moving average to catch up before moving forward.
Hard to be bullish on Ag when you sell milk for a living and have been losing money for most of a year, and the government keeps bailing us out, so instead of some farms going bankrupt and taking supply away, we all get to keep losing money.
Grain prices are fairly high, even if it is because the dollar is weak, so farmers will probably be willing to buy the pricier varieties of corn and beans and push the fertilizer to them next year, which would be a fundamental reason why MON and POT and the like would do well.
Nice post OA. There are fundamental reasons why ag stocks look good. It is not a shell industry. There are no dark forces beneath them keeping them in business (tarp, bail outs, health care reform, etc). People need to eat. As long as that is the case, we will grow a lot of corn which takes a lot of fertilizer. Supplies of grains world wide are tight right now which will be supportive of commodity prices. I think your point is that fertilizer stocks should out perform the other names in MOO. Besides the reasons you laid out, there is a lot of talk of merger and acquisitions between various fertilizer companies. MOO is no dog though! http://screencast.com/t/YjdjZDY2NjM
RMIX – US Concrete; a story that could be told by Jimmy Hoffa. Sure the liquidly does not match the strength of concrete – other than today with 1.2 M traded. But, at $0.70 to $0.75 …
MON - not really a fundamental person but there is more to this stock than Round-up: "AG seeds"
Thanks for your return OA. I have missed your insight. Break out of a symmetrical triangle on DBA. One of your favorites from last year.
I'm glad that I checked this site today to see that you would be back regularly. Thanks. I'll start visting daily now.
Puravada, are you speaking of the larger triangle since this last spring http://screencast.com/t/ZjJmZmE5MT or of something you see near by http://screencast.com/t/Mjc0OGQ3http://screencast.com/t/Mjc0OGQ3? I don't find either triangle that impressive but do believe the trend is quite strong.
A little something for you lady traders out there to have playing on one of your multi screens today while trading. Ohhh, yes, you too Sledge! http://link.brightcove.com/services/player/bcpid1785324681?bclid=1338935106&bctid=1913313052http://link.brightcove.com/services/player/bcpid1785324681?bclid=1338935106&bctid=1913313052
Thanks OA! I am now officially a daily visitor.
Duuuuuude,
Thank you for affecting my life so powerfully with that video, lol. I'll never be the same.
duuuude, thanks for that. The first chart or short term starting in Oct. I know its not as significant as MOS, MON, or POT. I like this one because it is reflective of the sector and the options are affordable. Additionally, I like the strike prices $1.00 out. Good trading, sir.