The fertilizer names have been much weaker than the commodity space as a whole... today they are green in a sea of red on a Russian price increase, but really Potash (POT) just warned of yet another production cut just 2 weeks ago. [Jun 17, 2009: Potash with Another Production Cut Hammering Fertilizer Names] We have short attention spans.
I see a low risk short opportunity and I want to begin expanding my short exposure with some of my cash. I still find "reflation" to be a tired, crowded trade and I think technology has a great chance to join it soon. But all in good time. I have almost no individual short exposure right now so I am going to slowly build some as the "right shoulder" looks to be forming (slowly) in the head and shoulders pattern we discussed earlier this week.
Usually I'd take heed of a green stock in such a bad tape but this is news drive and the news can be forgotten by next week. If I'm wrong, I'm wrong.
For now I am going to sell out of both Potash (POT), and Mosaic (MOS) - together they are only 1% of the portfolio, and begin shorting Potash with a 3.5% stake. This chart from stockcharts does not agree with some other sources - but I am showing it to you for reference. What I am looking at shows the 200 day at $96, and the 50 day moving average at $98, so 2 layers of insurance. I am going to short here in the mid $95s and I'll stop out over $101 if and when.
Speaking of agriculture - what a horror show over at Monsanto (MON) since last earnings - these names are among the top hedge funds favorites the past few years, so the action is striking.
Short Potash in fund and personal account
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