Top Agriculture Stocks #2 and Apple Inc. (AAPL)
This blog article will finish up our investor series on top agriculture stocks and will provide more analysis of the market selloff from earlier today.This is a reprint from Sunday's newsletter:
"This week is still setting up for more selling after being very extended in the chart technicals. It may get an initial bounce tomorrow based on Greece passing the austerity measures but that may be it for the week." The market and Apple's stock price have started pulling back in a reversion to the mean move.
MR spent most of Sunday's newsletter detailing why the extended market was more than ready for a pullback this week and it has started. The 1350 level has been very strong resistance for 2 weeks and the S&P 500 failed yet again to hold that level after moving above it to 1356 earlier in the day. The pullback target support area is 1330 to 1325 near the 20 SMA. Strong markets, which this is, typically bounce off their 20 SMA's on the initial move down. Any selling below that level should hold 1300.
Strong markets need pullbacks to recharge and continue an uptrend. Because the VIX is still low, this first retracement should be shallow and probably less than 3% before a bounce up occurs. Most healthy pullbacks move in 3 waves. The first wave is a down move, followed by a countertrend or second wave up (bounce), and then a final third wave down.
The market's bulls are getting tired and even the "King of Tech", Apple Inc., finally succumbed to huge selling from a parabolic move up to $526. The candle pattern that AAPL created today is called a bearish engulfing pattern. It was very negative price action and could be considered a "blowoff" top and potential key reversal day.
If it was any stock other than AAPL, we would say it is almost a guaranteed high for an extended period of time but you just never know with AAPL. However, we still believe it could be forecasting more selling to come in the short term and potentially even longer. But do not short AAPL. If Apple Inc. announces a stock split or dividend in the near term then this stock will fly higher again. Just like the markets, AAPL moved up way too fast recently and needs to recharge its energy.
Because Apple is such a huge weighted percentage of the Nasdaq (over 17%), its price movement is critical for the markets. It is the key stock to watch for what big money institutions are doing and it serves as a good gauge on the markets' health because of that. Today's Apple Inc. selling is a potential harbinger of more market selling to come.
Another market index that we were watching closely today was the transports. Momentum Rider already wrote a blog on the huge recent drop in the Baltic Dry Index as a forecaster for rougher times in the future. Today, the Dow Jones Transport Index took a huge beating and broke well below its 20 SMA and almost touched its 50 SMA. Dow Theory proponents would take that as another warning of heavier selling to come.
Finally, Moody's warned today that it may cut the credit ratings of 17 global and 114 European financial institutions. It is another indication that the euro zone government debt crisis is spreading and needs more immediate attention before fear hits again.
Moody's cited more fragile funding conditions, increased regulatory burdens and a tougher economic environment for its potential downgrades. Moody's new warning follows its downgrades last Monday of six European nations including Italy, Spain and Portugal. It also warned it could strip France, Britain and Austria of their top-level AAA grade.
The only positive piece of good news from last night was that China has expressed a "willingness" to help out in the European debt crisis. That is a huge deal for Europe and a confidence backstop for investors but the details are lacking as usual. Rhetoric and real action from China are usually two different things so its weight was short lived.
The bottom line is that Momentum Rider remains cautiously bullish. There have been dip buyers on every small pullback this year. So the 1350 resistance area is critical to break back above to keep this uptrend moving. The reaction to any more market pullback in the next few days or next week will be a good measure on whether the 2011 S&P 500 highs of 1370 will be tested in the first quarter or not.
Using the Power Stocks Table:
(1) Risk: Conservative (Cons); Moderate (Mod); Aggressive (Aggr); Speculative (Spec)
(2) Stop: Typically use a 3 to 4% closing stop below the entry price
(3) Trailing Stops: Use the 10 EMA (Swing) or 20 SMA (Short Term Trader) for protecting gains once above it; SMA = Daily Simple Moving Avg; EMA = Daily Exponential Moving Avg.
Value Stocks - Agriculture Stocks
Today's stock picks will be highlighting another beaten down commodity sector from 2011 but one that should rebound in 2012. There are many different ways to invest in the agricultural industry. There are stocks in food equipment, supply, biofuel, chemical, farm products, and fresh produce companies, just to name a few. Many of these stocks have formed strong bases and have had recent consolidation breakouts.
As we stated in Sunday's newsletter, agriculture is one of our favorite investment areas as emerging market middle classes expand and the world population continues to grow. Any pullbacks in this sector should definitely be taken advantage of by savvy investors. As promised, this is the second set of stocks we recommend but they carry a speculative risk rating so invest appropriately. The listed prices are factoring in a bit of a market pullback.
Top Agriculture Stocks (Speculative/Aggressive):
Investor Notes:
Check out the blog on "The King of Tech" for why Apple should be purchased on any pullback in the stock or market - $440 would be ideal (click here to read it). Also, read the last blog if you have not done so on overbought indicators.
Sunday's newsletter will focus on some attractive high-yield dividend funds to help ride out more market chop in 2012.
Check out our newest FREE promotional offer called the MR Market Crusher Pack for 2012 (click link). It includes 5 very valuable investor products worth $600 to get you started with a bang in 2012 for your retirement account.
Another exciting pack for our subscribers and new customers is our MR Power Income Pack for 2012 (click link).
It has 5 high income and retirement products worth $400 with some
unbelievable dividend stock picks with both value and good growth.
To find out more about why our subscription services continue to crush the market since we started in 2004, go to www.momentumrider.com.
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Good luck in your trading and investing,
CEO Jalexa Trading Consultants, LLC
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