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It's Time To Buy Some Fertilizer

|Includes: CF, IPI, MOS, Potash Corporation of Saskatchewan Inc. (POT)

The ag sector hasn't been hot since 2011. Is it time to heat up again? It appears a large up move may be in it's nascent stages.

Let's start with a previous leader in CF. This is the daily chart. You can see it has spent most of April bottoming. A head and shoulders bottom has appeared suggesting the lows are in. This confirms over the 50 day moving average at 194. Other positive developments include the RSI, a rising MACD and a brand new relative strength uptrend.

IPI is a mirror image of the CF daily chart. A head and shoulders bottom, a climbing MACD and a new relative strength uptrend. Short term positives are clear, but lets look at a couple more Ag chemical names to get a long term view.

POT and MOS have set up very potent bases on the weekly charts. They largely have not participated in the market uptrend off the 2011 lows.

Potash has traded in a compressing range for over a year. After a breakaway gap on earnings, the stock has traded very well. If the short term trend for the group is up, it would be safe to say this will try to breakout. It's also nice to see the moving averages flattening out after the long down trend.

Mosaic has a somewhat similar pattern going on basing for a year and a half between 45 and 65. As the right side of this base completes, the moving averages are starting to turn up. Recently price has tightened in a wedge and may be on verge of a breakout. Again, if the short term trend is higher, the longer trend appears to point higher as well.

  • If you want a pure leader, Monsanto (NYSE:MON) is the way to go. It's not mentioned here, but it's been going up while these other stocks are basing.
  • From a fundamental perspective, some investors may hold out because of the heavy precipitation in the Midwest this year. I'll be watching/listening for comments like that.

To summarize, a big move may be in the nascent stages. If we hear weather related reasons to not hop on board in the media, that would reaffirm the bullish scenario. Good luck out there.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.