Fertilizer Stocks Stink: CF, MON, MOS, POT

The Agriculture Chemicals/Fertilizer stocks have been stinking it up recently after showing promise as recently as this July. The group had been a very strong performer in the last bull market and was definitely worth watching to see if a positive trend could develop. However, after a brief sprint higher, the majority of this group failed to follow through and has been heading lower. Even the lone stalwart, CF Industries Holdings, Inc. (NYSE:CF) eventually caved in and headed lower. With renewed fears of an ailing economy, this group has suffered through renewed selling.

After a brief scare in early August, CF Industries Holdings, Inc.embarked on a month-long rally that carried it to almost $200 per share. This was a powerful move that defied what was going on with its peers. However, the move quickly failed, and CF fell even faster than it rose. CF has not technically broken down into a downtrend, but the reversal has to be disheartening for bulls in the stock. It is now struggling to hold above its 200-day moving average, and could begin a much deeper correction if it can’t hold near these levels.

Monsanto Company (NYSE:MON) also had a brief run in July as it cleared a trendline that had been acting as resistance. However, there was very little upward progress, and MON reversed to head back towards the bottom of its base. It has been stuck moving sideways as it tries to hold near $63 as support, but could be close to breaking under this level. The 50- and 200-day moving averages are starting to act as resistance and MON could complete a topping pattern with a close under $62.

Potash Corporation of Saskatchewan (NYSE:POT) has already broken down under its base after a similar reversal in late July. POT was unable to make any progress on its breakout attempt and instead reversed to dip under the key $50 level. While it found support at $50 in August, it faltered on its rally attempt and is back under this important level. This area should act as significant resistance at this point, and could lead to POT heading much lower.

Mosaic Company (NYSE:MOS) is another fertilizer stock that could be in trouble. Unlike the others, MOS never attempted to rally this summer, and instead has been working its way lower. The past few months have seen very volatile swings, although the end result seems to always be lower lows. MOS should be considered suspect until it can clear its recent highs near $74, as this level has acted as clear resistance over the past few months. (For more, see What The Heck Is Wrong With Fertilizer Stocks?)

The Bottom Line
The recent move in the fertilizer stocks reveals the danger of a bear market. The down moves certainly occur much quicker than the preceding rally attempts. This group likely trapped a lot of buyers after looking strong a couple of months ago and could be headed even lower. Traders should be very careful if they are long in this space, and may be better off looking for shorting opportunities on bounces.