Archer Daniels Midland Company manufactures and sells protein meal, vegetable oil, corn sweeteners, flour, biodiesel, ethanol, and other value-added food and feed ingredients; and processes oilseeds, corn, wheat, cocoa and other agricultural commodities. The company’s Oilseeds Processing segment originates, merchandises, crushes, and processes oilseeds, such as soybeans and soft seeds into vegetable oils and protein meals. Its products include oilseeds products; crude vegetable and salad oils; margarine, shortening, and other food products; partially refined oils; oilseed protein meals; cottonseed flour; and cotton cellulose pulp. Its Corn Processing segment converts corn into sweeteners, starches, and bio products. The company’s Agricultural Services segment engages in buying, storing, cleaning, and transporting agricultural commodities, such as oilseeds, corn, wheat, milo, oats, rice, and barley; and reselling those commodities primarily as food and feed ingredients.
To review Archer’s stock, please take a look at the 10-month chart of ADM (Archer Daniels Midland Company) below with my added notations:
Archer’s stock had been trading sideways for the last several weeks. Over that period of time, ADM had formed a clear resistance level at $42 (blue). In addition, the stock also created a strong level of support at $40 (green). That rectangle formation on ADM is very helpful in trading it because at some point the stock would have to break one of the two levels the pattern has created. Yesterday the stock finally broke the $42 level and should be moving higher from here.
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The Tale of the Tape: ADM recently broke out of its rectangle pattern. A pullback to $42 would provide an opportunity to get long on the stock. However, a break back below $42 would negate the forecast for a move higher.
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!
Christian Tharp, CMT
Follow me on Twitter: @cmtstockcoach