Agrium Inc. hitting resistance at $75.00

Sep 15th, 2010 – 1 Comment

  Hi Lou: Agrium has had a great run, Does it have any more legs to move significantly higher? Yoong   Hi Yoong, You have the story right on Agrium, Inc. ( AGU TSX ). It caught a bounce off support at $52.00 and has made a run to resistance at $75.00. I provided an […]


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agrium

 

Hi Lou:

Agrium has had a great run, Does it have any more legs to move significantly higher?

Yoong

 

Hi Yoong,

You have the story right on Agrium, Inc. ( AGU TSX ). It caught a bounce off support at $52.00 and has made a run to resistance at $75.00. I provided an analysis of AGU on July 30, 2010 for John. At the time it looked like, because of the pending period of seasonal strength that runs from August to December, that the trend that started in early July could run to $75.00 without much trouble. Lets consult the charts to see if there is enough gas in the tank to push through $75.00.

 

agu3

The three year chart clearly illustrates the resistance at $75.00 that has to be overcome if AGU is going to challenge the previous highs in the $115.00 range. The RSI is signalling that the stock is overbought at this time which should not come as much of a surprise given takeovers in the sector.

BHP Billiton’s hostile offer for Potash Corporation of Saskatchewan has investors excited about an offer for all fertilizer companies including AGU. What we have to keep in mind is that some of the hot money in the sector will only stay in the hunt for a period of time. Typically takeover fever breaks at some point.

 

 

agu4

The six month chart tells the story of a stock that has been very generous to investors who caught the bounce off of $52.00 in early July. The RSI and MACD both seem to be signalling that the buying fever has worn itself out for the moment and that its going to take some work to break through $75.00.

There are still over two months of positive seasonality for AGU and we certainly don’t want to shoot a running horse. Watch the uptrend line for any signs of a breach and be prepared to capture profits before you give them all back in the case of a pull back.

One thing I wanted to address is the need to have constant surveillance on your holdings and prospects. The analysis I conduct is essentially a snap shot at a moment in time. Things change on a daily basis which demands on going vigilance to reduce risk or generate profits.

 

Happy Capitalism!

 

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