Yesterday was definitely a frustrating day.
I'd imagine the feeling I had yesterday was a lot like those who are bearish the stock market feel when stocks go up when all the research they do says they should go down.
Lets get to it.
Mosaic. Listen I've loved this stock for a while now. And it's done great. Two days ago it hit a new multi year high! Awesome.
Heading into 2021 I knew the tailwinds were strong. Corn, soybeans, wheat all at 6+ year higher. Fertilizer prices soaring to 6+ year higher. Demand for grains through the roof with China buying more corn then they ever have.. by a long shot.
We have a stock market making record high after record high. A central bank hell bent on stoking inflation. Money supply exploding to the upside.
Talk of a new commodity super cycle.
You throw all those ingredients into a keg... and what comes out is an explosive rally for stocks like $MOS $CF $NTR among others.
And here we are.... all three close at or near new multi year highs on Wednesday ahead of their key earnings reports.
All three hit it out of the part. Huge beats, great outlook.
They are all setting up for a big 2021. The market opened yesterday and $MOS didn't trade flat, or pull back 1-2%. It got completely hammered. Closing down near 10%
Destroyed. As if the company had a terrible report.
I was terribly frustrated. Aside from owning calls for FEB MARCH AND JUNE, my research had me expecting this report to be the best one they've had in years. It WAS! I also expected the stock to have a tremendous day! It DIDN'T!!
It got obliterated!
The lesson. Even the best laid plans in the stock market can go awry.
I don't know why $MOS fell 10% yesterday on a massively bullish earnings report. Perhaps everyone was leaning to one side of the boat. Perhaps someone was waiting to sell into strength. Perhaps there was something buried in the report that spooked investors.
And yet I don't believe much of that. Yesterday and this morning analysts are out raising price targets on the stock. I think its going higher still in 2021. But clearly I was taught a lesson yesterday.
The sobering reality of the stock market is... on a day to day, short term basis, you could be right as rain, but the price will tell you differently. That's what makes trading short term so tough.
One name comes to mind recently that had a similar move as $MOS.
$AA. Last fall. The stock got clobbered after a bullish earnings report. It was a t$12... a few months later it was at $24.
One negative day does not spoil the brew.
That's another lesson for another day....