Nothing runs like an ag stock propped by infinite amounts of Fed stimulus and congressional cash infusions.
You tell ‘em, Sally!
And that’s where we are.
Today’s trade is a play on an overbought Deere stock (NYSE:DE), which has risen 130% since the Wuhan Bat Bottom back in March.
Have a look –
Technically, the stock looks tired –
- RSI was overbought for two full weeks through the beginning of September (green box), and
- Since then, price has diverged steeply from both RSI and MACD indicators. This action is indicative of a loss of buying momentum (also in green).
- We also see a narrowing range of trade (in red), with a rising wedge pattern now forming. A break below the bottom red trendline would ignite great deal of technical selling.
- And the ‘key’ to that ignition may have been offered just four trading sessions back, with the appearance of a gravestone doji (enlarged, in black), a generally trustworthy reversal signal.
Now, we’d happily look the other way after such a rise if the company in our sights wasn’t an old world manufacturer of nuts and bolts metallica with a market cap of $76 billion.
But that’s exactly what she is. And there’s no camouflaging it.
Nor might you blind the following numbers –
- The stock carries a full year trailing earnings multiple of 28,
- A bloated P/B of 5.74,
- Offers a nominal annual yield of 1.29%, and
- Maintains a heavy debt load (Debt/Equity is 3.76).
Have a look now at the weekly chart –
Maximum gain is $18.25.
Many happy returns!