Eye on Commodity Complex & Potash Corp.

I am "friendly" towards the energy and precious metals sectors within the commodity complex at this time (XLE, and GDX)... so when an underlying name jumps off of my screen that is related to the friendly sectors, I am compelled to bring it to your attention. Potash Corp. (NYSE: POT) is one such name that we should keep on our radar screens as representative of a potential upside reversal in the commodity complex.

Last week the stock plunged to a low of 137.07, which represented a 45% decline off its 6/19 high at 241.62. The 137.07 level also approached critical longer-term support at 134.50, which represents the 50% support plateau of the entire bull run from 24.00 to 241.62 that transpired from October 2005. The big upside reversal action so far off the 50% support plateau, coupled with the glaring upturn in RSI momentum, has put in place a potentially very positive technical set-up that should propel POT considerably higher. Key resistance resides between 166 and 168.50, which if (when) hurdled should trigger upside acceleratin towards an intermediate-term target in the vicinity of 200.00. Only a decline that breaks below 145.00 will neutralize the current pattern.