Potash Corporation (POT) Stock Is Full of Energy!

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Federal Reserve chairwoman Janet Yellen remained moderately hawkish on Monday, giving interest rate bulls hopes for another rate hike in the near future, but for a day, the news was still enough to lift stocks. The rally in stocks was largely led by energy and materials stocks, among them shares of fertilizer producer Potash Corporation of Saskatchewan (USA) (NYSE:POT).

Beat the Bell: Potash Corporation (POT)

How does a hawkish Janet Yellen translate into a rally in energy and materials stocks?

Much of it has to do with the dollar, which remained under pressure on Monday and which often displays an inverse relationship to commodity prices (among them energy prices like oil), which are priced in dollars. But why the sudden wake-up call in POT stock and some of its competitors?

Honestly, I’m not entirely sure, as there’s not much news to support the move, which leads me to believe it’s just a matter of sector/group rotation into an area of stocks that hasn’t had much love yet in 2016. Maybe there was supportive news, maybe there wasn’t.

But looking at the charts, I can at least say that Monday’s move was constructive, and it left more upside for us to leverage.

Potash (POT) Stock Charts

Starting off with the multiyear weekly view, we see that POT stock in early 2016 bumped into the late 2008 financial-crisis lows. From this angle, we also see that although shares of Potash have lifted off their early 2016 lows, they do remain range-bound.

Meanwhile, momentum — as represented by the Relative Strength Index (RSI) at the bottom of the chart — has showed positive divergence and is pushing higher. This may be a leading indicator to further support the more constructive-looking chart.

Potash POT stock chart weekly
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On the daily chart, we note that POT stock on Monday didn’t just rally 7%m but that this move came on a notable up-gap in the morning. This price action resulted in a break of the down-trend from the early 2015 highs (red dotted line), but the stock so far remains below diagonal resistance from last October (black line).

Potash (POT) stock chart daily
Click to Enlarge

Given Monday’s good-volume rally, it just looks like a matter of time before Potash stock rallies past other resistance points and targets a first stop around its red 200-day simple moving average, which currently resides around $18.90.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/06/potash-corporation-pot-stock-is-full-of-energy/.

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