On the belief that higher corn prices give farmers more money to spend on fertilizer and encourage more planting, WJB’s farm machinery index, which is comprised of farm equipment makers including Deere and CNHGlobal, appears to be breaking out.
Why is Grasso as well as most of the desk telling retail investors to step aside? Shouldn’t you participate in the gains?
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Most investors who trade this space aren’t quick to sell, explains Steve Grasso and these stocks can turn against you very rapidly. If you’re a retail investor and you’ve missed it already I’d stay on the sidelines. If you’re a pro I think there could be a little more upside in Deere but, again, I wouldn’t jump into the ag trade broadly.
In this space, make sure you know what you’re buying, adds Brian Kelly. For example the Commodities ETF traded lower Monday because it’s not only made up of grains but it also contains hog and cattle futures. Higher corn prices means it costs more to feed the livestock.
As we mentioned above, the move higher in farm machinery makers has been so quick and sharp I agree that retail investors should not get involved, says Patty Edwards. If you want a stock pick, you can look at Syngenta .