By Nicholas Santiago on April 15th, 2010 1:16pm Eastern Time
The major indexes have had a huge rally over the past eight weeks since early February. Almost every sector and index of the market has participated in this broad based advance. Some indexes such as the Retail HOLDRs (ETF) (NYSE:RTH), and the SPDR S&P Homebuilders ETF are up over 15 percent since the February 5th, 2010 low. These are huge moves higher in such a short period of time. Many sectors and indexes will not see moves of this size in years let alone weeks. The main point to recognize is that this has been a huge rally in a short period of time.
It is interesting to note that the one sector that has lagged the overall markets has been the agriculture sector. This is unusual to see especially if this market is in a so called economic recovery. In which case wouldn't agriculture lead the markets higher as demand increases?
Lets take a quick look at some of the agriculture stock leaders:
Potash Corp./Saskatchewan (NYSE:POT) produces and sells fertilizers and feed products worldwide. The stock is known as the leader in its industry group. Potash Inc. (POT) topped out in mid-March at 128.00 a share. Yesterday the stock hit a low at 108.00 which is technical support. Today the stock is bouncing off of the 108.00 support level and a short term oversold condition.
The next major leader in the agriculture space is Monsanto Company (NYSE:MON). This stock topped out in January, 2010 at 87.06. The stock has declined sharply since that time and is currently at a new low for the year at 65.70. This stock should have technical support at 62.50; however, it is very over sold at these levels already and could bounce.
The Mosaic Company (NYSE:MOS) is another stock that has not recovered from the January sell off. Mosaic Co. (MOS) topped out around 68.00 and is nearing a short term technical double bottom support level around the 54.00 area. This could be a short term bounce area for the stock.
These leading stocks in the agriculture sector could be due for a short term bounce from an oversold technical condition. However, caution should be used as they have been weak relative to the strength of the market. It is still a concern when the former market leading sector struggles in a bull rally.
Nicholas Santiago
Chief Market Strategist
www.InTheMoneyStocks.com
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