Diary of a Financier

Archer Daniels Gaining Steam

In Capital Markets on Wed 6 Apr 2011 at 23:34
  • Bought ADM @ 37.10 on 4/5.
  • Good valuation, but not mispriced enough to keep me engaged LT.
  • It’s gaining momentum with bullish technicals, so I’m comfortable with the opportunity to catch one more profit from this commodity & materials rally.
  • $40 target, $38 1st resistance.
  • $34 stop; $35.50 1st support.

I bought some Archer-Daniels-Midland (ADM) yesterday at $37.10.   After it traded down 1.24% today, that’s a tough welcome into a new position.  But just look at how these bullish charts are lining up:

ADM monthly- Note the divergence from 2007-08 that started the bearish slide. We now have a bullish confirmation of reversal.

ADM weekly- the divergence echoed again, with a bullish trend kicking into overdrive in 08/2010.

ADM daily- After MACD support held, the bullish trend is confirmed. Now heading for that double top resistance at $38 next.

It’s so rare to have the daily, weekly & monthly charts all so coordinatedly bullish at the same time without being overbought.

The fundamentals behind ADM are attractive to the point of not presenting much risk.  The valuation doesn’t make it a stock I’d hold long-term, because it’s just not that mispriced, plus I keep harping on the proximate unwind of the commodity cycle.  I’m still thrilled to catch the last innings of this rally, with momentum at ADM’s back, pushing it through that $38 weak double top.

–Romeo

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