This Agriculture ETF Might Help Grow Your Portfolio
- Posted by TheArmoTrader
- on February 2nd, 2012
The agriculture ETF, also known as the ‘Market Vectors Agribusiness ETF’ ($MOO) is set for a major breakout. One that can possible send it to the 2011 highs, which is about 11% away from today’s closing price. A great bullish pattern has taken form over the past couple of months and with a major breakout over the 52.60 area, this I believe will easily float to 58 ish, which is where the 2011 highs sit.
As you can see, $MOO has developed a beautiful Inverse Head an Shoulders pattern over the past couple of months. This bodes well for a longer term breakout, as the bigger the pattern, the stronger the move. The neckline is at 52.60, which has also been a major inflection point over the past 7 months. What you would like to see is a breakout over this area on volume and a close above that level. A measured move of this pattern would put your target at ~62.
In my opinion, there would be two ways to play this. One would be to buy a 1/2 position on a pullback to the 20 day SMA. I would then add on a breakout over 52.60 with a stop below my entry price. The second way would be to buy the breakout (if we break out without a pullback) for a full position. You would then stop out for half the position if it closes significantly below the breakout price (52.60). Your final stop (for the rest) would be on a close below the 50.00 level. That would be my max pain. If it closes below that (50.00), that would mean a guaranteed failed breakout and a close below the 200 day SMA (bearish).
But like I said, the pattern bodes well for a high probability trade. While the volume has not been great lately (was good near the bottom), the same thing can be said for the general market. Some of the stocks in this ETF include: $MON (8.1%), $POT.CA (7.8%), $DE (7.1%), $SYT (6.7%), $ADM (4.93%), $MOS (4.54%) and $AGU.CA (3.73%). If you want more exposure and beta, you might be better off playing some of the holdings instead of the ETF. Personally, $MON, $DE and $SYT look the best.
The only significant resistance that might give $MOO some trouble is this descending trendline on the weekly chart. A close above that would be very bullish. Above the 2011 high, I do not see major resistance until the ~$65 area (2008 highs).
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Jerry "TheArmoTrader" Khachoyan is currently an active trader, investor, market commentator, and Finance-Twitter participant. He started being involved with financial markets in September of 2008. He concentrates on using technical analysis and an understanding of macro to determine his trades and investments. He graduated UCLA with a degree in Political Science in 2013. The stock market to him is one of the greatest inventions by man.
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