Trade Ideas Newsletter 05/20/2016

CF is positioned for a contrarian breakdown

Based on the above analysis in CF, traders should verify that their portfolio can handle increased risk from an additional position. Also ensure that CF improves diversification in your current portfolio. Lastly, clever traders check how a new position matches up with not just their account, but the previaling market action as well. For example, take a look at the S&P 500. Is it moving to the upside or downside? Has it recently broken a key ceiling or floor? Be sure to line up your trading actions on CF with the trend in the overall market.

CHART

Right now the proprietary sentiment levels, calculated by Traders For Wealth, indicate an suprisingly positive bias toward CF. However, the price action in CF has been moving down contrary to the sentiment. This could be a strong sign of an impending contrarian breakdown. Traders should view this as a bearish position and make sure it is confirmed by overall market action, and in line with their current portfolio.

Cf Industries Holdings (CF)

CF Industries Holdings, Inc. is the manufacturer and distributor of nitrogen fertilizer and other nitrogen products. The Company’s nitrogen fertilizer products are ammonia, granular urea, urea ammonium nitrate solution (UAN) and ammonium nitrate (AN). Its other nitrogen products include diesel exhaust fluid (DEF), urea liquor, nitric acid and aqua ammonia, which are sold primarily to its industrial customers, and compound fertilizer products (NPKs). The Company’s segments include ammonia, granular urea, UAN, AN and Other. The Company’s ammonia segment produces anhydrous ammonia (ammonia), which is the concentrated nitrogen fertilizer product as it contains 82% nitrogen. Its granular urea segment produces granular urea, which contains 46% nitrogen. Its UAN segment produces UAN, which is a liquid fertilizer product with a nitrogen content that typically ranges from 28% to 32%. Its AN segment produces AN. Its Other segment includes DEF, urea liquor, nitric acid and NPKs.