[youtube:http://www.youtube.com/watch?v=O17MA58P-QY 450 300]
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Newton says that a body in motion remains in motion unless acted upon by another force. Right now that treatise translates well into the action provided by our tentative bull market, perhaps best exemplified by the individual success of one CRAAPL, Inc.
Do I trust this momentum? Not for a minute, especially not with the struggles my belleweather precious metals stocks have been enduring — a precursor perhaps to the interest rate battles that loom on our horizon. Will I play the momentum, however? Of course I will, but with names that makes sense in the broader scale.
Right now, agricultural stocks are starting to make a stealth comeback… moreso those stocks who are largely designed to assist farmer’s yield. Why? I believe it’s because the farmer’s cost of capital has increased, despite our low interest rates, thanks to the ridiculous bull market in farm land prices. Just in Southwestern Indiana alone, farmland that sold for $2,500 to $3,000 an acre six or seven years back is now going for well over $10,000 an acre, and in some cases being sold at auction for $14,000 an acre. In places like Iowa, the values are coming in even higher.
All of that means that farmers need to increase yield value — even at $6.50 a bushel corn — in order to make a return. That bodes well for fertilizer companies like MOS and POT for example. These are two potential breakouts that are not quite ready for prime time, in my humble opinion.
Not so unready, however, is my MON-ster, which has been running nicely since the first of the year, and only recently experienced a pullback. I think it’s the pause that refreshes, and the next stop is breaking out of this consolidating triangle (on the weekly) to take out the top of this fibonacci retrace:
Your relatively low risk stop is pretty obvious on the above chart (below $77.00). Your upside is broad. In the bad old days, MON got as high as $154 a share. I think eventually it will leave even that number behind.
I think we can agree we are in a bull market– at least for the moment — even as we clamber up the Wall of Worry together, pitons digging for purchase, ropes securing us and sealing our collective fates should we drop. If we are going to take advantage, let’s go after the stocks that have been making sense this year without making a big drunken fuss about it like CRAAPL. That’s the ags, and I’ll have more on this subject.
Best to you all.
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