Analyst Says Technicals in Fertilizer Stocks Turning Bearish; Sees Downside in AGU, CF, POT, MOS
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Get Alerts AGU Hot Sheet
Price: $91.34 +1.44%
Rating Summary:
14 Buy, 10 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 35 | New: 23
Rating Summary:
14 Buy, 10 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 35 | New: 23
Trade AGU Now!
Stocks in the Ag sector will likely be under pressure Friday as long-time bull and technician Frank Longman at Brean Murray made some concerning comments on the Fertilizer industry in a research note earlier.
Longman voiced concern following a recent rally in the group on the heels of a jump in agricultural commodities prices. He said, "We’d argue that an overreliance on correlation here is dangerous as fertilizer isn’t going to change the weather and high crop prices don’t make anyone rich for next planting season when they’re the result of poor yields."
The analyst recommended reducing long exposure to the Fertilizer sector, and said selective shorting should even be considered at current levels.
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Longman voiced concern following a recent rally in the group on the heels of a jump in agricultural commodities prices. He said, "We’d argue that an overreliance on correlation here is dangerous as fertilizer isn’t going to change the weather and high crop prices don’t make anyone rich for next planting season when they’re the result of poor yields."
The analyst recommended reducing long exposure to the Fertilizer sector, and said selective shorting should even be considered at current levels.
- Agrium (NYSE: AGU) - Selling around $92 should offer shorts $22 in downside potential, and only $7 in upside risk. Longman cited the "broken uptrend line and negatively divergent indicator set." He noted volume has been light into resistance.
- CF (NYSE: CF) - Sees downside to $170 "on throwback to underbelly of broken daily uptrend line, negative RSI divergence and weak volume metrics that make upside continuation unlikely."
- Potash (NYSE: POT) - Believes the stock could fall to $39 and sees only about $2 of possible upside.
- Mosaic (NYSE: MOS) - Sees $3 in upside, about $10 in downside.
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