proactivetrader

Comparing Fertilizers Stocks

From: ProactiveTrader <proactivetrader@ya... Sent: Sat 01/03/09 11:23 PM



Subject: MOS earnings, retest 34-31, at 36.86 Type: Attachments

Attachments: MOS1109.JPG 38.6 kb MOS1012009.doc 82.5 kb

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MOS, Mosaic, 36.86, up 2.26 on Friday. Earnings due Monday, after the close. Technical indicators are expecting good news. (45 calls at 49 cents and 30 puts at 63 cents for a total cost of $1.12 to play before earnings.) (Or the 35 calls at 3.84 and the 35 puts at 1.85 for 5.69 cost to breakeven. Price would have to move up to 42 or down to 32 after earnings in this hedge to breakeven.)



The attachments show a 5 Star stock contrasted with a “capitulation selling” chart. The Flow of Capital chart (flowofcapital.com) shows negative signals but improving with some green signals indicating active bottom fishing. Good earnings news will bring in more bottom fishing and propel price up to 40 resistance. Bad news will be a negative surprise and target price back down to test the bottom, below 30. Meeting expectations will target a test of 34.



The attached 5 Star Rating (stockpickerusa.com) is a result of calculated, long-term value and forecasts. Capitulation selling took price down to 22 after being as high as 163. This sets up the opportunity to be pro-active after the earnings announcement. Price has already moved up 68% from the bottom, anticipating good earnings news and the fact that all the major selling is done. (See Flow of Capital, FC, turning up and the spike in Demand, DS indications of pre-mature bottom fishing.)



After earnings are announced, price will target 40 resistance or 30 support. Recent analyst downgrades as well as the move up in anticipation of good earnings point to the probability of selling on the news and a retracement to test support at 34 and 31 on the 5-day chart.



Only 90 days ago analysts were looking for 2.24 in earnings, but now they are expecting only 1.41 on Monday. Next qtr. earnings estimates have dropped from 2.83 to 1.13, getting worse rather than better. Earnings reported will be a reality check that will likely retrace part of that 68% move up from the bottom. Bottom fishers may have had their fill and wait for lower prices as indicated by the Demand spike on the attached chart.



Proactively there is an opportunity to participate after earnings are announced and as price heads for known support (or resistance) levels .