That’s right. An assinine call, for sure.
Look, everytime I research these hot ag. stocks, I find another articleÂ proclaiming that we should all be investing in ag. for the long term.Â It seems the general consensus is that these ag. and food commodities stocks are bullet-proof, and will continue to make 52 week highs, even in the wake of a recession.
While I’m not qualified to present a contrary argument as to the fundamentals surrounding these stocks, I find it difficult to believe that farmers will continue to get rich, buy new farm equipment, and continue expanding operations while the consumer suffers death by a thousand paper cuts (from their bills, of course). Although it would certainly be poetic justice for the much maligned farmer to continue banking coin while the consumer drowns in a pool of debt. You know, because typically farmers have had to remain indebted for most of their lives to keep the farm operational while the consumer ate cheap (albeit often gov’t subsidized) food.
Anyway, I’m calling a top. Like all bubbles, this too shall pop.
What I’m expecting is that stocks making 52 week highs like [[MOS]], [[POT]], and [[CF]]Â are in the process of forming the head of a future head and shoulders breakdown. Please, do not make the mistake of thinking these ag. stocks are just going to rollover and die. No, the asshole dip buyer will step in, at least a few more times, before the rollover will occur. These suckers will think they are getting a bargain.Â You will hear the pundits discuss the buying opportunities, as they simulataneously unload the positions they’ve been pumping for the past year.Â
If your thesis is similar to mine, then what we want is to look at some stocks within the sector that are already exhibitingÂ significant weakness. While stocks like [[MON]] and [[ADM]] areÂ exhibiting weakness, there are still asshole dip buyers waiting on the sidelines. As always, when shorting stocks, we want to stay away from those that have dip-buyers waiting. Therefore we will look for ones trading beneath or right at the 50 day average, as the dip-buyer will likely have moved on to stronger names.
[[VMI]] Fly begs you not to short this one. Do it anyway.
[[DE]] Full Disclosure, I’m short DE. Deere guided down Q2.
[[CNH]] Nice re-test of Head and Shoulders neckline.
[[AG]] is included here even though it is above the 50 day. I just don’t see this one getting past the resistance of that triple top.
I will continue to monitor the technicals inÂ Agriculture Chemicals and Farm Construction Machinery. If I’m wrong about the top, then we should see all these stocks begin to make 52 weeks highs, similar to [[MOS]] and [[POT]].