Looking at some charts today, I'm starting to warm up to the fertilizer group. Now, before you think that I need to get my head examined for sidling up with ags, let's take a look and see what's going on first. This is one of the most beaten down groups in 2010, and while there are many others that have been hit hard commodities in general...this sector is just plain ugly. The big names, POT MOS MON and AGU are down anywhere from 10% to 45%. I generally don't look to buy at bottoms, rather if a trend develops and finding a low risk entry. No doubt there is heavy supply of stock, poor technicals and bigtime resistance, but they certainly merit worth watching. Take a look at the POT chart below.
Tag >> MOS
Gold is starting to regain its shine and I am expecting a move back to 1200 soon. The metal tested 1100 on multiple occasions of late and held its ground. The dollar is elevated but that has not knocked down gold as much. Room for the dollar and gold? That's what the market is telling us. Gold will be in breakout mode after it eclipses 1156, where a swift move higher is a strong probability.
Commodities are also on the radar. Today many coal names were upped and given higher targets by UBS after having come down some 3-5% of late. My favored area is the fertilizers, specifically POT, MOS, AGU. Last week Potash RAISED their estimates significantly and today they are saying inventory levels are 16% below their 5 yr average. The last time a similar condition existed potash prices went parabolic. For price reference, POT is 50% below its alltime high, MOS is 70% below and AGU is 35% under its alltime high. They are highly volatile momentum names, but the conditions are good right now for some robust gains over the next several months.