Click chart to enlargeThe chart above is MOS. The ag names are beginning to get overextended short term. They have an enormous amount of momentum and can run a bit further, but we're reducing exposure here as they are making a quick run for the tops of their channels. We'll probably see higher prices over the short term and wish we hadn't sold, but in a month or so we'll be able to buy them back at today's prices or cheaper. There's no sense in holding them if they will return to these levels at some point in the future. Our strategy is to sell half now and play a "wait-n-see" game. If they rally further, we'll sell the rest. If they drop, we'll be looking to repurchase the shares we sold closer to the bottom of the channel. The action today particularly in MOS and AGU suggests that these stocks are putting in a "blow off" top (opposite of a capitulative bottom).
As for the Dow's action, what is there to say? We're entering one of the darkest eras in American economic history. There is no suprise that the Dow is in freefall. We're holding DXD until it's all over. We're also holding SMN, which we will add to if the Ag names have a quick and incredible run to the upside from here. Now is not the time to aggressively buy SMN, but if Ag gets ridiculous, we'll be backing up the truck. At some point, these stocks will see the bottoms of their channels once again.
10 comments:
I dont see any signs that a top has formed. Just look at the Williams %R for any of the big ag names. When that falls below -50 you can be confident we've seen the top. I wouldnt even speculate about a top until the %R falls below -33. I am looking at Wm%R(10) and Wm%R(7) to get the earliest possible sign of a top.
Given the heavy losses in other sectors, it makes sense to think that we might see even more money flood into ag.
Scary opinion. Anyone who only uses one system to "tell" them when there's a top or bottom, and is relying on the market to "make sense" is going to get into trouble.
Brief article on commodity ETFs in Seeking Alpha blog.
Link
Would someone please explain the Williams %R to me? TIA.
What u talkin about "one system"?
Technicals for CF:
Price in center of trend channel.
RSI trending up but still under 70.
MACD half as high compared to the last run. The peak MACD for this run is lower than the peaks of the 3 previous runs.
Wm%R(14) still in the green.
Wm%R(7) fell to -40 at yesterday's close.
So only one out of 5 indicators is saying sell. And that's a very weak indicator.
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Technicals for MOS:
Price 2/3 up its trend channel.
RSI trending up, just broke through 70 yesterday. If you look at the previous 2 runs, the top was reached 4-5 days after breaking 70 RSI, with 10% more gains.
Wm%R(14) and Wm%R(7) still in the green.
MACD 90% as high compared to the last run.
Here there are 2 out of 5 indicators is saying sell *soon*. (The high MACD, a very weak indicator) and the position in the channel. But netiher of them say sell *now*.
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Technicals for POT:
Price halfway up its trend channel.
RSI trending up but still under 70.
Wm%R(14) still in the green.
Wm%R(7) just fell a tad bit below -20. It means nothing.
MACD half as high compared to the last run. If you compare the MACD from the first 10 days of april with the MACD for the first 10 days of june, they do look similar. Also notice what happened to the MACD while POT had its blow off top in april.
There are no indicators saying to sell POT. It should be illegal to sell POT.
Here is a link to ag's chief problem today:
Link
Hoping for a bounce back tomorrow. Maybe? Please?
This posted today in the POT message board. No link provided:
S&P RAISES RECOMMENDATION ON SHARES OF POTASH CORP TO STRONG BUY FROM BUY
SNPMarketScopeResearchNotes2008-06-12 14:11:22.000POTPOTASH CORP SASKATCHEWANR. O'Reilly-CFAS&P RAISES RECOMMENDATION ON SHARES OF POTASH CORP TO STRONG BUY FROM BUYOur upgrade reflects our more optimistic outlook on fertilizer prices resulting from robust industry fundamentals. International spot potash prices are at nearly $1,000 per ton, well above POT's current export list prices. POT will soon bring on a potash mine expansion, allowing to it ship about 10% more tons in '09. Phosphate prices should also average higher in '09. As a result of higher assumed prices and margins, we are boosting our '09 EPS estimate to $15.50 from $12.00, up from $10.00 for '08. With the revised outlook, we are raising our target price to $280 from $220.
Article from yesterday from POT CEO saying fertilizer prices not at a peak yet.
Link to the article
AGU message board is reporting an upgrade. No link provided, but it may be price target lift by TD from $125 to $140 which could help the overall ag sector a little. More info to factor in with the chart readings for MOS, POT, etc.
Could you please post a chart for POT? Thank you.
Since there seems to be so few places to put one's money, what are the chances that agriculture stocks in general and fertilizer stocks in particular will trade mostly sideways for a short period of time until the DMA catches up with them and then head North once again? Sort of like MOS did from April 25th to May 25th, if we turn a blind eye to the drop the week prior to April 25th?
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