Potash Corporation of Saskatchewan Inc. should be monitored for a seasonal trade

Nov 9th, 2015 – Comment

  Lou, What are the prospects for Potash Corp stock? The dividend yield is high at 7%. Thanks, Doron   Hey Doron, Thanks for the assignment. This will be the fifth time since 2012 that I inspect the charts for Potash Corporation of Saskatchewan Inc. (POT TSX). The last was on June 19, 2015 on […]


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POT Logo

Lou,

What are the prospects for Potash Corp stock? The dividend yield is high at 7%.

Thanks,

Doron

 

Hey Doron,

Thanks for the assignment. This will be the fifth time since 2012 that I inspect the charts for Potash Corporation of Saskatchewan Inc. (POT TSX). The last was on June 19, 2015 on a request from Dimitrios. The shares were trading fro $37.83 and provided a dividend yield of 4.92%.

The study indicated that POT had been pulling back from a 52-week high near $47.10 since late February of 2015. Earlier in the month the shares were overbought and the MACD and the RSI generated sell signals ahead of the decline. In early March POT broke below the 50-day moving average and then breached support along the 200-day moving average in late May. The coup de grace came in early June as a death cross formed.

It was advised that the stock was not a buy and that Dimitrios would be best served putting the stock on his watch list and look for a better entry point. Retrospectively that was the right call. The decline continued shredding capital along the way.

Agricultural stocks enjoy a period of seasonal strength that usually runs until early January which makes your request a timely one. An audit of the charts will identify the prospects for POT.

 

 

POT

The main feature of the three- year chart is the established downtrend line that started at the beginning of the year and ran to the 52-week low of $25.80 in early October. I examined the longer term chart that went back to 1990 and unfortunately there isn’t a ton of support at current levels. That is not to say that there might not be seasonal trade setting up but on a technical basis there is scant evidence of a trend reversal.

 

 

 

 

 

 

 

 

POT2

The six-month chart exhibits the bounce off the 52-week low, the run to near $29.00 in early November, and the pullback to current levels. If your investor profile allows for the risk associated with an established downtrend line, a death cross, and resistance along the 50-day moving average you might want to take a run at the seasonal trade.

 

 

 

 

Next time I will investigate the case for Valeant Pharmaceuticals International Inc. (VRX TSX) for Syl.

 

 

Make it a profitable day and happy capitalism!

 

 

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