If you thought food prices are high now… just wait.
Things are about to get worse.
For one, there’s Russia.
Thanks to its invasion of Ukraine, fertilizer prices are up 300% year over year. “Russia is one of the biggest exporters of the three major groups of fertilizers (nitrogen, phosphorus and potassium). Physical supply cuts could further inflate fertilizer prices,” says MSN.com.
Two, as noted by Fox News:
Farmer Ben Neal says, “We’re getting hit on every front on every expense possible, from fertilizer to fuel to labor insurance, everything in between — our packing supplies. I think that that will soon be reflected at the grocery stores. On top of what we’re already seeing, these fertilizer price increases haven’t really affected the grocery store prices yet. They will start coming this summer.”
As that happens, the price of food skyrockets.
So, where should we invest?
Take a look at stocks, like Nutrien (NTR), CF Industries (CF), The Mosaic Company (MOS), and Intrepid Potash (IPI), and Bunge Ltd. (BG).
- The Dow is up 138 points to 34,628
- The S&P 500 is up about 16 points to 4,511.75
- The NASDAQ is up 51 points to 14,587.75
- Gold prices are up about a quarter to $1,933.53
- Bitcoin is about 1% to $43,362.23
- Oil prices are up about 40 cents to $96.42
- The VIX is down slightly to 21.23
When fear runs amok, keep an eye on VIX technical patterns.
Many times, the fear gauge can be a great indicator of when fear is out of hand, and when you may want to start betting on fear, given market calm.
Look at this two-year chart of the VIX for example.
With it, we’re using Bollinger Bands (2,20), relative strength (RSI), MACD, and Williams’ %R. What we want to see is agreement among all four in oversold or overbought territory, as our indicator for potential reversal.
Is this a perfect indicator with no faults? Not at all.
But it’s something to be aware of.
Take a look at what happens with the VIX tests its upper Bollinger Band – the green lines above and below the VIX. When it gets to or above its upper Band, we consider it stretched, and overbought. It also tells us fear is way out of control.
To confirm that finding, we look to RSI. Notice what happens with VIX is at its upper Band, and RSI is at or above its 70-line, the VIX reverses lower.
We can confirm overbought conditions, with spikes in MACD, and Williams’ %R as well. In fact, look at what happens when MACD spikes, with W%R at or above its 20 line.
Many times, we’ll see a reversal.
Again, this isn’t a perfect indicator. But it’s an important one.
Insider Buying: Groupon (GRPN)
The company just disclosed that its second biggest shareholder, Jan Barta of Pale Fire Capital bought another 375,000 shares worth $7.5 million. The insider bought GRPN at prices raning from $19.77 to $20.20. We’re not entirely sure about why Jan Barta bought here – especially with the company anticipating a miss on Q1 earnings, and price target declines.