Potash Corporation of Saskatchewan (POT) — the famed producer of potash, phosphate and nitrogen — is scheduled to report earnings Thursday before the bell. Potash stock has a tendency to move quite dramatically after earnings, so let’s map out some reference levels we can trade against after the report (once emotions have settled a little).
Potash stock tends to react well to various technical support/resistance areas as well as technical formations — that is, when POT doesn’t gap up or down in a major way after an earnings announcement.
Since August 2009, POT has showed great support around the $28 area, which most recently was once again tested in August, the first time since July 2010. Thus, this is the first area of reference to focus on bigger-picture in case shares melt down after Potash earnings.
On the upside, a major resistance line that has been in place since June 2012, and acted as support until July of this year, is around the $37 area. If Potash stock moves above there, it would show great strength.
On the closer-up daily chart, my No. 1 level to focus on is the $33 mark, which if broken to the upside would result in a little resistance line from the September highs to break. Depending on the strength of a potential break past $33, POT could easily start working into the big, empty space above the September highs, which ranges from around $33.80 up to at least $36.
On the downside, immediate term support sits around the $31.10 area, which also coincides with the stock’s 50-day simple moving average (yellow line). A break below there could easily move Potash stock toward the $28 area for another test of the long-term support line — and depending on the selloff’s force, might even push the stock below there.
So there they are: four important levels to focus on once Potash reports earnings this Thursday.
Serge Berger is the head trader and investment strategist for The Steady Trader. Sign up for his free Weekly Market Outlook Video here. As of this writing, he did not hold a position in any of the aforementioned securities.