We last discussed Potash Corp of Saskatchewan (POT) for Real Money at the end of August and were unimpressed. It is three months on and we now think you can probe the long side here and add to longs on a close above $19. Why the new tune?
When we wrote about POT on Aug. 31, it had popped up to around $18 on heavy volume. It looked like it was about to lift off but we counseled that a strong close above $19 was needed. In this updated chart, below, we can see that the slopes of the 50-day and 200-day moving averages are positive. That was not the case at the end of August.
After the August spike the On-Balance-Volume (OBV) line retreated to a new low but it has since slowly improved. The Moving Average Convergence Divergence (MACD) oscillator only briefly turned bullish in early September but now it has been above the zero line (bullish) for most of November -- a big difference, in my opinion.
The indicators on POT have come together in a positive way that was missing in August. POT is above its now rising 40-week moving average line. The weekly OBV line has been improving on this time frame for two months and the MACD oscillator is close to an outright go long signal as it is poised to cross above the zero line.
I am looking for POT to reach $24 and you can probably risk to $17.