I still love the fertilizers but in a market pullback they get hit pretty hard; we are now at the very tip top of a range - S&P 500 has resistance at 50 day moving average of 1390. So if we get a pullback, I expect the fertilizers to pull back, so I am just making a bit of a switch from 1 part of the food chain (pun intended) to another.
As I've stated in the past, I plan on using Powershares DB Agriculture Fund (DBA) as both my safety stock and literally my money market. The past few days remind me of another reason I like this ETF - it has no earnings report which short sighted investors can use to knock 20-30% of its value away in an hour. Uncle Ben is making this play act even better than I anticipated and the world's hedge funds are taking his (our) money and running with it.
I've sold about $5K-$6K worth in all 3 of my fertilizer names: Potash (POT), Mosaic (MOS), and CF Industries (CF) as the charts are beginning to look toppy and frankly the run has been massive, and pushed most of that into more Powershares DB Agriculture Fund. So I keep my food inflation exposure consistent, just in a different way. I hate having this low of exposure to the fertilizer group, but I just want to be able to buy these names at lower prices.
I'm also adding further to my Ultrashort ETFs here. We've had a lot of "great" news thrown at the market of late, bond insurer bailouts, more Fed cuts assured, (not that there was any doubt on *this* end but the babies and toddlers in the market need explicit assurance every 3 days), and heck we can even stuff more mortgage down the throat of Fannie and Freddie (why those 2 stocks rally on such news is beyond me) but we'll see how much more resilient the market is from here. We can constantly go down this path of "6 months everything will be fixed" but it just appears to be a big pile of denial to me.
Technically, picture = 1000 words. If we break through these levels, than I have to change my tune and turn Kool Aid Bull myself ;) Remember, "Wall Street" economy is not "Main Street" economy although I still think 2008 corporate profits for non foreign based business units will be seen to be a total fairy tale in retrospect, so as they go down, values should go down.
Once again, people have no clue about the tidal wave of inflation coming in my opinion and just how awful this is going to be to a consumer lead economy. Profits are going to be punished for any company tied to the US consumer, no matter what the stock prices are doing today. It's simply denial. We are in full Kool Aid stage, which happens for a period every 3-5 weeks where bad news is great news. We are simply conditioned to believe the Fed does fix everything and I think sometime in the next 9-12 months people will finally come to the realization it cannot. But they won't believe it until they see it. Again, frankly, I expect Ben to not last more than this 1 term and when we look back in 2010 he will be blamed for massive inflation. It is ironic in a way.
Long all names mentioned in fund; long Mosaic and Powershares DB Agriculture Fund in personal account
