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On the Watch: The Baltic Dry Index, fertilizer companies and MOS

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The set-up: The Baltic Exchange in London has monitored seaborne trade since 1744. I watch the Baltic Dry Index — which measures demand for shipping by tracking the cost to transport raw materials, commodities and more — as an indicator of overall economic health.

Shipping fleets can’t be increased quickly because it takes two years to build a freighter. When there’s a lot of cargo to move, demand goes up, rates go up, and you’ll see a rise in the Baltic Dry Index. The BDI is ticking up levels we haven’t seen since 2014.

Meanwhile, in the last two weeks our Canadian dollar has turned around, run over its 50- and 200-period moving averages, and just kept going. Canada is a commodity-based economy, so I’m not surprised the markets are cranking to new highs here. I see strength in Australia, another commodity-based country, and in Europe.

As I mentioned a week ago, I’m bullish on agricultural input stocks and ETFs like VanEck Vectors Agribusiness (MOO). The rise in these names goes hand-in-hand with what I’m seeing across the globe.

See Petra’s late Sept. call on agriculture stocks

The play: The Mosaic Co. (MOS) is another fertilizer company coming off a bottom, lagging some of the other names because the company had Hurricane Irma damage at its storage facilities. That’s all been disclosed now and the stock is starting to break over its 50-period moving average. On Monday, I’m looking to get long on MOS, on anything over $21.67, expecting this to eventually make a run to the 200 moving average, right around the $25 mark.

The outlook: The markets continue to march ahead, with small caps breaking to new highs after being laggards all this year. I’ve heard so much talk about a market top, but so far it hasn’t materialized. I always say bulls climb the stairs — so the market chart looks like a stair-step — while the bear falls out the window, straight down like somebody shot him. Any pullback in markets I’m regarding as a normal profit-taking correction in what’s looking like strong global markets overall.

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Petra Hess runs PetraPicks.com. She is a technical swing trader and long-term investor in domestic and Canadian stocks and ETFs. At the time this article was published on RagingBull.com, she had not taken a position in Mosaic Co. (MOS), but planned to under the circumstances described above.

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