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Mosaic: Big Rock, Hard Place

By Alan Farley
06/02/09 8:06 a.m.

Mosaic(MOS Quote) has caught fire in the last three weeks, breaking out above six-month base resistance at $46 and rallying above the 200-day EMA on May 18. It hit $59.35 a few days later and dropped into a sideways pattern. This is typical price action at the 200-day, indicating a test of that could last four to six weeks.

The stock has a bigger problem, though. The rally has pushed into the huge gap between 52 and 67, posted back in October. This is no man's land, where selling pressure can emerge at any time. Even worse, a rally into the top of the gap will issue a common short selling signal that will attract even greater downward pressure.

I'd like to say there were better sector choices, but Potash(POT Quote), my favorite in the group, has rallied into a similar gap. Meanwhile, Market Vector Agribusiness ETF(MOO Quote) is hitting a zone of tough resistance between $38 and $41.

All in all, there's just one conclusion here: take profits in the sector and move back to the sidelines.

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