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Why are the Ag Stocks So Weak?

During this weekend's show, I fielded a question from @VA__Mike:

@stevenplace all the ag stocks. Whats up with them. $AGU $POT $MON $IPI

This is a great example of how certiain spaces in equity land are succeptible from risks in other markets.

Agriculture stocks are the "shovel salesman" to the booming farming industry. When the prices of agriculture commodities run higher, it boosts the margins for farmers and spurs more investment in new technologies like GM-seeds, fertilizer, and equipment.

So when ag commodities are in a downtrend, it creates a proxy headwind for these stocks.

Check out $DBA, an index that tracks ag commodities:

Quite the downtrend, and you can see the damage done by viewing the individual futures in ZW, ZC, and ZS.

This space may still be a short with decent risk/reward. Let's take at two stocks I"m watching right now.


Potash is coming into a huge level of support right here and could be due for an oversold bounce. If the stock fails to make a higher high off any kind of bounce, then a fill from the "takeover gap" could be imminent.


CF Industries has been putting in a channel that is frustrating the longs and shorts alike. If it can clear and hold new 10 day lows, I'm anticipating a run back down to 120. However if the sellers fail to manifest themselves and the name gets above 150, we should see a good squeeze for 20 points.

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by Steven Place

Steven Place is the founder and head trader at