It's saddening watching video clips of buildings in Ukraine being attacked by Russian missiles. Pretty similar to the current US market in super volatile sentiment. Vix has been spiking.
Amidst the calamity, reviewed and taken position in some sectors.
Actually apart from oil and gas, Russia also export many other commodities. One of these is potash, the major component used for agricultural fertilisers. In fact, Russia is the second largest exporter of potash and other agricultural fertilisers. With sanctions on Russian goods and supply chain delays, it is expected the cost of fertilisers may increase. One could speculate companies like MOS and CF could benefit from more customers, but on the flip side, the overall increased fertiliser costs could reduce demand. Either way, the charts of MOS and CF have been rather encouraging for long positions.
MOS
MOS is currently in an uptrend. It has completed accumulation phase and ready for break out. The recent rally in late Dec with minimal pull back is suggesting presence of demand. Price broke above the range on 2 Feb, form a test (or back up) and finally we see commitment of up swing. Expect price to continue up moves, next immediate resistant levels at $55 or $62. Stop loss around $42 at swing low.
CF
CF is also in very bullish up trend, closed at all time high on last Friday 25 Feb. It might be a little late to initiate a long position, with increased trading volume from 21 Jan 2022 onward. Potential trade set up would be to wait for pull back to around $73 with top loss around $70.
Defence
Some defense stocks are also seeing up moves in the wake of the recent tensions. Kratos, Lockheed Martin, Raytheon and General Dynamics just to name a few.
Raytheon supplies a wide range of defense products including radar systems and missile systems. It also have other business units including providing aircraft engines for Airbus, aviation maintenance services. It was reported that supply chain strains would delays some of aircraft engine deliveries. However, it is seeing increased demand for defense products.
Highlights from its latest Q42021 earning reports:
• Sales of $17.0 billion
• GAAP EPS from continuing operations of $0.46, which included $0.62 of acquisition accounting adjustments and net significant and/or non-recurring charges
• Adjusted EPS of $1.08
• Operating cash flow from continuing operations of $3.2 billion; Free cash flow of $2.2 billion
• Completed the acquisitions of FlightAware and SEAKR Engineering, and the disposition of RIS' Global Training and Services business
• Achieved approximately $190 million of incremental RTX gross cost synergies
• Company backlog of $156 billion; including defense backlog of $63 billion
• Repurchased $327 million of RTX shares
RTX price structure wise, just completed an accumulation phase. The earning report on 25 Jan 2022 seems to be the catalyst for the start of an up swing. The small range from 2 Feb onward probably resembles the anticipation of Ukraine-Russia conflict. Last Friday, price broke out with commitment from the range. Potential more up side to the price.
The recent volatility in equity market is very challenging for traders. Do manage risk appropriately and trade safely!
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