Potash (POT) Finally Gets Long Rumored Bid. But Rejects It

The market is nicely higher in early trading. There have been a handful of solid earnings reports in the retail space, including Wal-Mart (WMT), Home Depot), and Urban Outfitters (URBN), and those stocks are higher.

But the big news is in the ag space, namely fertilizer company Potash (POT). It has long been rumored that someone like BHP Billiton (BHP) would make an offer for POT, but it has never happened for one reason or another. Lo and behold, this morning POT is up +25% to $140 after receiving an unsolicited bid for $39 billion from BHP. But the best news may be that POT management rejected the offer, saying it substantially undervalues the company. Looks like things are heating up in the ag space.

Asian markets were mixed overnight, while Europe is nicely higher this morning. The euro is also higher for a second day at the expense of the dollar. Commodities are mixed with gold flat near $1224 and oil prices higher near $76.

Among the sector ETFs, materials are leading the way (+2.23%) followed by industrials (+1.40%); consumer staples (+0.45%) are lagging, but all sectors are in positive territory.

The 10-year yield is bouncing from yesterday's new lows, up 5 bps to 2.62%; and the volatility index (VIX) is down -5%, back below the 25 level to 24.78.

Trading comment: Nice bounce this morning, but it doesn't really change the overhead resistance equation. Yesterday I said I expected a bounce to relieve the oversold condition of the market. But at this point I am not expecting more than an oversold bounce. I could be wrong, so I'll take it one day at a time, but I want to stay defensive until proven wrong. Remember, opportunities are easier made up than losses.

long POT