Alan Farley
As it turns out, Potash Saskatchewan (POT Quote - Cramer on POT - Stock Picks), Agrium (AGU Quote - Cramer on AGU - Stock Picks), CF Industries (CF Quote - Cramer on CF - Stock Picks) and other group stocks shows identical wedge patterns. Soberly speaking, these are much better suited to money managers holding positions for months or years than to timing-conscious investors trying to take a good piece out of the long-term uptrend.
There's a second characteristic of wedge patterns that points to additional danger down the road. As the lower and upper pattern lines start to converge, a loss of faith often emerges because shareholders feel frustrated watching deep drawdowns between rally bursts. This conflict can induce a dramatic trend reversal over a very short period. There's admittedly little evidence that the agricultural rally is about to turn south, especially with the healthy volume noted on the recent breakout. But folks looking for a quick buck who move into this sector will find it much tougher going than trading tech stocks in 2007. As such, I can't recommend new positions at this time. Alan Farley provides daily stock picks and commentary with his "Daily Swing Trade" newsletter.
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