Thursday, January 03, 2008

Ag Play Is Still Working

The bull market in agriculture is still kicking. Today, Monsanto (MON) reported great earnings and the stock gapped higher. It gained more than $9 on the session, and rose to new highs on a huge surge in volume (see graph above). This is all bullish.

The way we are playing this bull market at our shop is via the Ag ETF - MOO (see 2nd chart).

MOO is made up of many of the top stocks in the agriculture and mining space. It has been a top performing ETF since its inception last fall.

Today, MOO also rose to a new high on exploding volume. Among the many, many ETFs I follow, MOO has among the highest relative strength rating.

Sometimes these high volume breakouts after a long uptrend has been in place mark buying exhaustions, where the buying power simply runs out and leaves the stock or ETF vulnerable. It's hard to say if this is the case here or not.

MOO still looks solid to me. I probably would not chase it higher if I didn't already have positions in it, but I would be comfortable adding exposure to it on pullbacks or at support.

long MOO


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