Potash (POT) Sitting on Long Term Trendline ~ market folly

Friday, August 8, 2008

Potash (POT) Sitting on Long Term Trendline

I've been seeing a lot of people concerned about the action in the agriculture sector, namely fertilizer stocks. Just wanted to post up that while yes there is some concerning action in those stocks, the long term trendline is still in tact. And, that's all I'm concerned about. We all know these companies are still firing on all cylinders, as evidenced by the blowout quarters they just reported. The market, though, likes to sell off anything remotely commodity related; that's just how it is. As Lawrence so effectively points out: until the long term uptrend is broken, these stocks are still manageable.

(click to enlarge)

We are currently right around the long term trendline. You can buy around $168/169 and then stop out around $165 if you want a tight stop or $159 if you want a less conservative stop. These fertilizer names are on the verge of a major technical breakdown. And, although we love their story fundamentally.... you've got to adhere to the price action we're seeing.