I see the identical pattern in 4 charts, so I am cutting back exposure to all 4. These have the makings of companies that could be beginning to break down. If I am wrong, I'll pay up a slight premium to regain exposure once the technical pattern improves. The names are different but it's the same pattern - 4 companies which are breaking down below their 50 day moving averages. Unless they quickly reverse back over and above, this could portend a more serious move downward.
I see a lot of other companies which could be approaching a similar set up with another day or two of bad behavior - i.e. we could have a lot of charts rolling over. So despite the tepid bounce-back in the indexes (which we said in the weekly roundup would not be surprising as nothing goes straight down), I am seeing some things I do not like in individual charts.
- Mosaic (MOS) reduced to 1.2% exposure (from 2.2%)
- CF Industries (CF) reduced to 0.6% exposure (from 1.2%)
- Gafisa (GFA) reduced to 0.8% exposure (from 2.0%)
- Ctrip.com (CTRP) reduce to 0.7% exposure (from 1.3%)
These moves take another 3.3% away from long exposure and into cash. Although a bounce was expected in the indexes as (a) the market lost 3.5% last week which is huge for an index and (b) the S&P 500 is now at a key long term support level, the 50 day moving average of 1377 - I continue to be cautious in the mid-term, although hazarding a guess of the day to day action is a fool's game. But I'm going to let the individual charts tell me the story; these 4 have turned (perhaps temporarily) for the worse, and there are quite a few others with potential to follow suit. I'll show the charts below:
Disclosure: Long all names mentioned in fund; long Mosaic in personal account
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This article has 14 comments:
- PELUSIN
- 12 Comments
My Website
May 28 03:34 PMI BELIVE AFTER TODAY YOU WILL THINK
I KNOW NOTHING
- MarkF
- 1 Comment
May 28 04:55 PMIn my opinion that's a weak thesis.
These are momentum stocks - volatile and subject to $$/sector rotations in the short-term.
- DaveW
- 150 Comments
May 28 05:06 PMCare to share AN superior wisdom with us then? Do you have the b***s to put your market moves out there for all to see? Oh yeah, your b***s are tied up admiring your own website... What AN stupid reader.
- Gunslinger
- 26 Comments
May 28 07:48 PMThe market darlings (ferts, coal, steel, oil/gas services, drybulk, et al) have serious fundamentals behind them, and no prospects of slowing. This isn't like trading technicals on the INDU, SPX, QQQQ, DBA, DBC, etc.
FWIW, buying the hot stocks on dips to/near their 20EMAs has been an unreal technical trading strategy this year. IMO, the trade now is buying calls on the above situation. The gains and accuracy % have been unreal. I could list the major watch names if anyone expressed interest (probably similar to the author's).
- macsadiq
- 1 Comment
May 28 10:27 PM- sunrises
- 148 Comments
May 29 01:15 AMI heard both sides regarding current fertilizer trend. Rather than buying, I've heard Mos, Pot , Agu are going to have a slide. Perhaps, this is a good entry point and those who missed out etc. If so, which fertilizer do you recommend in value and growth?
- retepog
- 11 Comments
May 29 09:34 AM- Thinking ahead
- 65 Comments
May 29 12:34 PMMOS is a wild ride lately, but I'm looking forward to the next earnings report. Now is the time to buy this group (ag) -- not sell it.
- DaveW
- 150 Comments
May 29 12:46 PMJury still out on this call, but, in many ways I like it as I think a pull back is possible. It seems the risk of a move higher is about equal to the risk of a move lower in ag. It's amazing how much flak you get for SELLING HIGH!? Isn't that what the disciplined investor is supposed to do? In fact you lucked out in your selling on yesterday's spike. Today, all four are down even with the street's buy pressure from the revised GDP numbers.
Also, I like that you didn't remove all four positions, just captured some gains with a ~50% reduction in each position. Seems to me like a win-win considering the sector risk. We'll see how your story ends...
Always enjoy reading your thoughts and strategic moves, thanks.
- richandmer
- 30 Comments
My Website
May 29 01:24 PMThanks for the article; however, as I view the chart for mos and cf, I notice that both have seen a pattern of dropping below the 50dma before moving back up again. With this in mind, it looks like this is normal. At least I hope so.
- User 136518
- 1 Comment
May 29 01:52 PMThanks
- pitchforkpaul
- 13 Comments
May 29 04:31 PM- TraderMark
- 248 Comments
My Website
May 29 06:33 PMThis was a purely technical call on a sector I've been bullish on, probably far longer than all the people in the comments section who are demeaning the call. It was not a 1 day call, and when the fertilizers have a new move, I plan to be in it; they have been very range bound for about 5-6 weeks (I sold most of my positions at what I call the Intrepid Potash top), and I got yelled at then too. About 10% higher.
I notice a lot of emotion, and when you sell people seem upset. In the ire of the commentary people seem to miss the point that if things reverse, I'll change course too. I am not ready to change course after a 1 day change and nothing works 100% of the time. In a general sense when companies break below their 50 day moving average, on a closing basis, you need to be wary. I still see a gap around $110 in MOS which I can see being filled in due time.
I sold some of my coal today today - ANR up 60% in a month - I can only imagine the ire that will draw when Seeking Alpha announces it ;)
As someone else says, its too soon to tell; I'm not a daytrader and we'll see soon enough. I think the commodity complex is ready for a pullback and fairly or not, fertilizer gets thrown in that mix. We shall see how it plays out the next few weeks.
Apparently I am the only person who when they sell a stock, it reverses - everyone else must have some incredible portfolios - I am just slogging along, trying my best. :) I'll check back in a few weeks on the group and/or if we see a nice solid breakout (up) on volume, I'll pay up and get back in.
- User 206425
- 1 Comment
Jun 06 10:51 PMMore by Trader Mark
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