Nutrien (NTR) earnings show another ‘inflation trade’ biting the dust
Fertilizer company Nutrien (NTR) earnings were hit by continued demand destruction in agricultural commodities and Nutrien stock is getting hammered. It, along with Mosaic (MOS) is a watch list item of mine. Glad all I did was watch. This all but ends the daily chart uptrend it had been struggling to hold until today.
This will probably eventually morph into an opportunity in the Ferts and Ags in general. As an example, NatGas is already 40% off of its 2022 highs. But for now, it’s ending an uptrend, not beginning one.
The company also missed third-quarter profit estimates, hurt by cooling prices of crop nutrients as farmers cut fertilizer application to rein in costs, and rising costs of natural gas, which is used as a feedstock to make nitrogen fertilizers.
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That chart is a good illustration to the question — can you make money out of “Chart Trends” and if so, how?
I looked first at the July -Sep. ramp up and wondering how many “chart wizzards” (not you) would boast with 20/20 hindsight about how they played it from bottom to top and earned big money for their subscribers.
Of course claming that such a feat is anything than luck is shooting the bull.
For example, how to decide after each of the two sub-legs up whether the chart continues upwards or folds like a lawn chair? (Same applies from March-May).
Answer: you can’t of course, and there are no fancy technical indicators that have any value. The wise guys will quote some moving average or oscillator or trend line or Bollinger Band or whatever. When it works (by chance) they are full of themselves but when it craps out they just say “sorry, false breakout”.
The question for all TA systems would be to cover up a big portion of the chart to the right of a particular price point and ask the promoter to continue drawing the chart according to what their system predicts for the next 30 or whatever days. What you will get in practice is just a lot of “if this, then that, but if that, possibly the other”
So the question remains: how to make money out of “trends” apart from spinning a roulette wheel?
You illustrate very well why I have my ‘Men who stare at charts’ shtick. Many try to mystify you with the patterns, shapes, lines and other things they see in their charts. Then soft serve or simply move on from the failures and amplify the successes.
I started as a TA first and foremost. But much of it is bullshit. Pretty charts (you should see what some TAs do with them over at TradingView) with cool trend lines, fans, Fibs, and shapes and colors of all kinds. Some really pretty stuff.
But TA is one tool and IMO should not be used in a vacuum in most cases. Trends are valuable to me as an ongoing guide. But there are different trends to be respected depending on time frames. For example, the US stock market is ‘technically’ in a bull market. A long-term secular one. The US stock market is ‘technically’ in a bear market. A cyclical one.
There are a few writers out there that maybe readers of this site have noticed I cannot get beyond. I scratch the itch and criticize them every once in a while. It’s because of the tones they use; these definitive tones that make their friggin’ charts sound way more important than they actually are. It’s a scam, on balance. IMO
DM you nailed my thoughts on this exactly. There is so much use of the words might, could, should, maybe, etc. with TA.
I watch these ups and downs and get frustrated that I haven’t participated. But then I realize I couldn’t have participated anyway because there was no way I could call it!
The effort I see people on some sites drawing their insanely complicated charts, it makes me shake my head. I do feel there’s some value in more followed indicators like 50 day and 200 DMA just because so many people trade off of them.
But in general, I would like to just put my money in and wake me up in 10 years to see that it’s worth more. I can’t tell you how happy I am that my cash and t-bill holdings are earning money.
The only good thing I have done in 33 years of trading was to get out in Jan of 2022. Now I am relying on Gary (just kidding) to tell me when to get back in….!
Well, I think TA is far from perfect but what is? The theory of relativity argues that the universe unfolds according a predictable scenario, while quantummechanics – the other big theory – argues it is all based on coincidence. After half a century we still have to come up with that reunifying theory… Is Euclidean mathematics true? Or non Euclidean? Because even mathematics is based on unproven premises, and not all mathematics is based on the same, unproven axioms. There is no absolute science or truth out there. Let alone TA:)
It is not that I disagree with TA being a limited tool, but is it a useful tool? I wonder how we, as traders, determine an entry or an exit without TA? TA is an imperfect yardstick, but it seems to me the only measurement tool for short term market movements available. Besides, not all TA is “unscientific”. The Fibonacci retracement is based on the Fibonacci sequence. The same mathematical sequence that explains, among other things, the distance between the branches of trees. Does that mean it always works in TA? Of course not. Can it help to improve your estimations? I think it can.