Trade of the Day: Mosaic Company (MOS)

The best bullish opportinities are in the commodities stocks

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Today, I’m recommending a bullish trade on The Mosaic Company (NYSE:MOS), which produces concentrated phosphate and potash crop nutrients.

My indicators are still giving sell signals for the fifth week in a row, which is quite unusual and generally not a good sign for the bulls. The reason behind those sell signals is that we are in what I would call a split market. Looking at the New York Stock Exchange (NYSE), the ratio of declining issues to advancing issues was 3:1, meaning that for every three stocks moving lower, there was only one stock moving higher.

Rising interest rates are hitting the auto-makers and the housing stocks, which have continued to decline recently. For example, shares of homebuilder Lennar Corporation (NYSE:LEN), which I recommended puts on earlier this week, have fallen about 5% just this week and more than 35% from their January highs.

Right now, it looks like the best bullish opportunities can be found in the materials and commodities stocks. MOS is one such stock that is just starting to break out, though commodities such as oil, coffee, sugar, gold and platinum have also been rising and breaking out.

So despite my generally bearish outlook for October, I’m still willing to put my money into stocks that deal with commodities for some bullish exposure. And if we can get through the rest of October without a severe correction, the bulls would be encouraged to know that the market is almost always bullish in the last two months of the year.

Buy to open the Mosaic Company (MOS) Dec 35 Calls (MOS181221C00035000) at $1.35 or lower.

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InvestorPlace advisor Ken Trester brings you Power Options Weekly, which delivers 5 new options trades and his latest trading advice to you each Friday. Trester has been trading options since the first exchanges opened in 1973 with a winning streak that goes back to 1984 with money-doubling average annual profits since 1990.


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