Seeding Stock Growth in Monsanto

Anxieties over a global industrial slowdown have to contend with the increasingly aggressive buying in agricultural chemical stocks like Potash Cp Saskatchewan (NYSE: POT) and Monsanto (NYSE: MON), which reports quarterly earnings on Wednesday.

Both stocks were up more than 2% to start of the second quarter, along with Rentech Inc. (NYSE: RTK), leading the group higher after short-term pullbacks from earlier last week. For most of these stocks, Monday’s gains represent follow-through to the upside after buyers stepped in to take advantage of conditions that had become increasingly oversold. Chemical stocks like Mosaic Company (NYSE: MOS) and CF Industries (NYSE: CF), actually did finish technically oversold last week, selling off in sharp, three-day retreats.

Shares of Monsanto are already short-term overbought after bouncing higher for two days in a row. As of midday on Monday, the continued strength in the stock has not had an impact on Monsanto’s rating (neutral) or its short-term edge (positive, and just under half a percent).

That said, traders and more active investors may want to wait to see whether or not buyers stick around to push the stock even deeper into short-term territory. Unless the stock reverses sharply in the second half of the trading day on Monday, Monsanto shares remain more likely to deveop negative, short-term edges than positive ones over the next day or two.

Short-term traders looking for weakness in industrial stocks might want to consider a stock like Cascade Corporation (NASDAQ: CASC). Cascade Corporation manufacturers the kind of lifting equipment commonly used in warehouses, and the stock has been sold aggressively in recent days as part of a pullback from a mid-March test of year-to-date highs set in February.

Down five days in a row as of Monday’s close (and pulling back by more than 2% on Monday alone), shares of Cascade Corporation have earned “consider buying” ratings of 8 out of 10. CASC has also finished technically oversold for the past two sessions, trading down to its lowest level since the beginning of the year.

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David Penn is Editor in Chief of TradingMarkets.com