We began 2022 on a positive. The first trading day of the year saw the S&P 500 and the Dow Jones inch out record highs. Growth stocks, the Nasdaq, were under some pressure and moving differently than the other two markets. In my Market Moment articles, I spoke about why this is the case. Growth stocks are getting hit due to fear of the Federal Reserve hiking rates and wrapping up their easy money call. Markets are pricing in a rate hike in March 2022.
The 10 year yield chart is what you need to watch. We are at resistance of 1.70%. A break above signifies rising rates. Not great for growth stocks, and the fear of rising interest rates is hitting all markets. Not really a surprise to us as we knew markets were primarily rising due to cheap money as there was nowhere to go for yield. Bond yields might be rising, but will it be enough to divert cash away from stocks and into bonds? I don’t think so, just because the bond yields still aren’t beating inflation.
In the upcoming days, watch this 10 year yield chart. It is going to be instrumental to where stock markets go. With the drop in stock markets, we are seeing an everything sell off. Precious metals, crypto’s and yes, some of our agriculture stocks are getting hit. In the upcoming weeks, I bet a lot of our agriculture stocks will be testing major support zones. It will all be about whether or not we should buy these dips. A lot of it depends on the companies and catalysts, but overall market conditions will be important. Keep this in mind as we explore these charts.
AG Growth (AFN.TO)
AG Growth announced the acquisition of Eastern Fabricators this week. Eastern specializes in the engineering, design, fabrication, and installation of high-quality stainless-steel equipment and systems for food processors. Eastern operates three facilities in Canada with two in Prince Edward Island and one in Ontario. Eastern serves a range of customers across North America and has developed strong relationships with some of the world’s largest multinational food processors.
“AGI Food has grown rapidly over the past several years as we brought together an outstanding team that delivers a unique combination of design, supply, and project management to food processors globally,” noted Tim Close, President & CEO of AGI. “Eastern builds on a solid foundation in our Food platform, bringing a very talented team along with market leading products, services, manufacturing capacity and, most importantly, customer relationships built on years of high-quality execution. This newly expanded team will drive strong revenue synergies as Eastern is integrated into the Food platform. We welcome the entire Eastern team to the AGI family and look forward to accelerating the growth of Eastern and our overall Food platform.”
Stock wise, AG growth has held up fairly well as stock markets are dumping. Regular readers will recall that I became bullish on the breakout above $30. Near the end of 2021, we pulled back to retest this zone, which saw buyers step in. Technically, AG growth remains in an uptrend. Expecting a higher low to be confirmed with a breakout above recent highs at around $35.33. I think this is a $40 stock by Q2 2022.
Verde Agritech (NPK.TO)
No news on this one, but take a look at this chart!
The stock briefly climbed above $3.00, and the uptrend remains intact. Good momentum even as stock markets fall under pressure. We were bullish on the breakout above $1.40, and the breakout above $1.90. Clean technicals on this one. A good case study. These are the types of charts and breakouts we want to trade or invest in. Verde remains in an uptrend as long as we remain above the higher low of $2.20.
Earth Alive Clean Technologies (EAC.V)
Earth Alive is a soil health company and an industry leader in microbial technologies. Earth Alive’s innovative products contribute to regenerative agriculture, natural dust suppression with minimal water use and industrial cleaning that is ecological and human friendly.
Another chart one. The last news piece came out two months ago on the highest year to date Q3 revenues in the company’s history.
To a technical trader like me, the structure looks appealing. I am someone that likes to look for early reversal trades. Earth Alive could be a contender. A long downtrend, finding some support at a major support zone. Some strong volume at the end of 2021, but to begin 2022, volume has been thin. I would want to see volume pick up here, and find some signs of bottoming. A range, or a double bottom pattern ideally. Will be keeping an eye on this one for the next few weeks.
CO2 Gro Inc (GROW.V)
CO2 GRO’s proprietary CO2 Delivery Solutions™ technology is revolutionizing the global 600 billion square foot protected agriculture industry. They have created a dissolved CO2 solution that when misted onto plants, provides growers that cannot gas with CO2, the opportunity to increase plant yields by up to 30% and profits by up to 100%. Applying dissolved CO2 also suppressed the development of pathogens such as E.coli and powdery mildew, helping to reduce crop losses.
Last year, CO2 Gro announced a bunch of commercial feasibility trials. To begin the new year, the company updated shareholders on progress at an ongoing commercial feasibility at a California greenhouse. This has been underway for three months. Observations at this stage of the commercial feasibility indicate successfully meeting yield targets and Pathogen Perimeter Protection™ suppression of powdery mildew, both a key focus of the commercial feasibility.
Okay. We have something here. We talked about this support zone in the past. We broke below it near the end of the year. The breakdown turned out to be a false breakout. Prices have climbed back above. We are also above my moving average. Some nice bullish signs here. What we need is just a nice pick up in volume. This could then set us up for a move back up to the $0.26 zone.
Agrify (AGFY)
A rough few months for Agrify, but technically, we might be building a support platform to bounce from. Fundamentally, Agrify announced the acquisition of PurePressure, the leader in solventless extraction and advanced ice water hash processing equipment in the cannabis and hemp industry.
With the acquisition of PurePressure, Agrify has strengthened its rapidly expanding extraction division by adding best-in-class solutions to its product portfolio in two of the fastest growing subcategories in the cannabis and hemp extraction market. In addition to its other extraction solutions, Agrify can now offer its customers premium solventless processing products and rosin presses to support any operation, big or small. The Company also inherits PurePressure’s intellectual property, talent, and stellar reputation for quality, reliability, precision, control, and exceptional customer service. PurePressure’s annual revenue for 2021 is approximately $10 million, and the acquisition is expected to be accretive in early 2022.
Technically, we are finding some support here around the $8.75 zone. If this were to break, then the next support zone comes in at previous record lows at $6.81. But so far, we are developing a range which is a great sign. Markets move in three ways: uptrend, range and a downtrend. We have had the downtrend and the range, here’s hoping for an uptrend. What I want to see is a breakout above $11.35 to trigger this new uptrend. Not only would we break the range, but also close above my moving average. Plenty of positive signs. With pretty consistent good volume, I will be keeping Agrify near the top of my watchlist.
Let’s end off this week with two bigger names.
Deere (DE)
John Deere here is looking good with a nice breakout above a trendline. Almost triangle like in pattern. A very strong breakout backed by news regarding a newly fully autonomous tractor ready for large scale production later this year. Tech and agriculture folks. Gotta love it! A run up to previous record highs looks likely.
Tyson Foods (TSN)
We spoke about Tyson Foods and the breakout above $85. We got the retest, and buyers keep pushing the price higher. Really strong stock given the broad market sell off. What’s next? A date with previous record highs around $94.
