בס״ד

Watch: Wall Street Hangs Expensive Mosaic. (MOS)

Posted on March 24, 2022

Today’s trade offers a rare opportunity to pull in 2580% on nothing spent.

Sound interesting…?

Here’s the skinny –

An American potash company with a global reach, now rocketing higher in price due to the ‘Nazi cleanse’ operation occurring in Ukraine – and we find a tremendous opportunity to make a buck.

Look no further, good Jews and loyal Noahides – The Mosaic Company (NYSE:MOS) has left the launch pad and is now soaring at harrowing Hindenberg heights.

And that demands some answers.

Today, we hope to provide them.

Fundamentals

While it’s true there’s a war, and both Ukraine and Russia are large suppliers of phosphates and potash, and there’s a global supply chain problem and mounting inflation and fertilizer inventory issues in general, prices will not rise indefinitely.

Nor will traders miss a chance to put a lid on the bid, so to speak, when things have carried too far.

And that’s precisely where we stand today with Mosaic.

  • Mosaic trades with a P/E of 15.34 (roughly 50% higher than its historical norm).  Next year’s Forward P/E is just 9.33.
  • The stock pays a 0.69% dividend, and
  • Trades at 2.31x Book.
  • Quarter over quarter earnings FELL by 17.30%, and
  • Consensus sees earnings FALLING next year by 31.46%.  So why all the hype…?
  • Insiders have sold 97.93% of their holdings in the company since November, but that includes VALE’s dump of their $1.25 billion stake in the company, just prior to the shares taking off.

Poor saps…

Here’s the daily chart –

Technically, we’ve got –

  1. An RSI overbought signal from two weeks ago – the most overbought the stock has been, incidentally, since 2007 – that triggered negative divergence from price (in green), while
  2. MACD, too, is weakening.  Together, they spell a loss of bullish momentum.
  3. Price shot up better than 60% in a single month (read: overreaction to the Ukraine war),
  4. Creating a massive gap that needs filling at 62 (in blue), and
  5. A trend line whose hemline is rising faster than a 60’s mini (in red).  When that line is sundered, we’ll likely see substantial selling.
  6. The turnover is already legendary (in black) and will carry the stock lower toward
  7. Its first Fibonacci retracement line at 52 (in purple).

Now consider the weekly chart –

  1. Weekly RSI is now overbought for three full weeks (in green) – a sure sign a top is in play,
  2. While a fast-narrowing rising wedge (in red) speaks to a sharp break lower in the next five to ten trading sessions.  Rising wedges are always bearish.
  3. Volume is on track for a near fifteen-year high – indicating distribution from strong hands to weak (in black), and
  4. The bunched, weekly moving averages will not brook their distance from price for a lot longer (in blue).  They have a habit of drawing price toward them, Svengali-like, once the distance between increases to such magnitudes.

And it’s for all the foregoing that we’re offering the following blockbuster SPECULATIVE trade for you, our beloved subscribers –

A Jew and His Gold recommends you consider selling the MOS April 14th 66/71 CALL spread* for a credit of $1.71 (4.70/2.99) and selling the MOS April 14th 66/62 PUT spread** for $1.69 (3.10/1.41).  Total credit on the trade is two cents.

[*Sell the 66 CALL and buy the 71 CALL.  **Buy the 66 PUT and sell the 62 PUT.]

Rationale: we like the prospect of spending nothing and pulling in $4.02.  Adjusted for minimal commissions, that would give us a 2580% payday.

Max loss is $4.98 (difference between the CALL strikes less the initial credit).

Only trouble is the time frame.  With just 21 days before expiry, we have to see action in the near term.  Hence the SPECULATIVE label.

Breakeven on the trade comes at $66.02, a mere 2.8% below last night’s close.

Praise His name.  Fear Him.  And keep His mitzvoth.  For that is the whole of man.

Many happy returns!

Matt McAbby

 

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