Potash keeps fascinating. Everyday, ad nauseum , we here from our friends in Saskatchewan that this stock is worth much, much more. Just to help that notion the dividend is doubled, a stock-split 3 to 1 is announced and just about every other trick in the book is used. Completely without self interest of course ( the top dog is now close to 1 Billion for himself, and the premier is now a person rather than a nobody). You can listen all day to BNN or CNBC and literally everybody, without exception, knows that this thing is going up.

Malthus lived about two centuries ago. His claim to fame was his dire prediction that we would all starve because the World could not support a population that was then about 1/10 of what it is today. His arguments sounded quite plausible but so far it has not (yet?) happened. Now we are getting a slightly different version of the same argument, this time it is the Chinese  joining the west and wanting stakes on their BBQs. But;

On the left is the Scotia all commodities price index, notice that it is nowhere near its highs and seems to be completing a b-wave correction which would mean that it could resume its drop to levels where it was for 10/20years before the peak of 2008. Notice also, on the right, that potash as a commodity reached a price close to $900 per unit, it is presently at a bit over $300 and has been there for quite some time.   Potash Corp is operated as a cartel, an oligopoly with POT as the lead dog with, I believe 40+% of World output. The name of the game is to restrict output in order to maximize the monopoly rents (like OPEC). As a consequence income is in direct relation to the market price. Two years ago $900 per ton equaled $240 per share, today $300 should equal about $80 or so. You are paying more than twice as much today. Not very sensible.

Potash, and for that matter all the other fertilizer companies like MOS and AGU, all have B-waves, and in the case of Potash, an exceptionally clear one. Here is the chart once again.

That this should be sold, at $160, was fairly clear some half year ago. The green “trapeze” ,if I remember my trigonometry, tells you precisely where the C wave travels the same (vertical) distance as the A wave. However C waves ALWAYS have to be 5-waves themselves which was not yet the case then. Furthermore a 50% or 61.8% had not been reached yet. So the better symmetry point was the next one (the stock was late but only a single dollar off the 61.8% target of $174 (the high was $173). Notice that the RSI and MACD turned a long time ago and the last few weeks the stock was propelled by upgrades, recommendations, Mosaids spin-off from Cargill and a whole slew of other noise.

By the way, if this is a B-wave, the stock will trade below $90 soon. Time will tell. A mistake that can easily be made, and I did on AGU, is that because the A wave within the B wave does not need to have 5 subdivisions as does the C wave, it is possible to be too early. The correction in Potash has already lasted 2 years so I do not think that applies now.

Then and now. chart on left plus text gave the expected trajectory. We were in a wave 3 expected to end at $160 or so. In reality we went almost a dollar higher. then we got wave 4 that lasted almost 3 months and took the stock down about $25 or so. A first wave up and second down followed and more recently we are in a third wave of 5. That implies that we need a 4 (most likely a triangle or flat) and a 5th to complete the sequence. How far it will go is anyone’s guess. Recently RBC put it in the focus list (may explain the self fulfilling action the last few days!)and MOS reported excellent profits.. Perhaps 170 or even 180. However after that we go back to $135 or lower, maybe a lot lower. Keep an eye on this stock and be ready to step aside.