Take a look at fertilizer stocks as another example of the market heading higher, despite previously correlated assets moving in the opposite direction. One I watch, CF Industries, CF, is having a really rough time. From the chart below you can see that today triggered a Head and Shoulders top, with a price objective lower to at least 156. 
This would coincide closely with a full retracement of the move higher from May 2012, down to 153.40 and the current 3-box Reversal Point and Figure price objective of 144. A pretty good alignment for a short trade. But it becomes a very scary situation for market bulls when you look at the same chart cleared of all the moving averages, Fibonacci’s and trend lines, and comparing it to the S&P 500, SPX. The chart below does that. 
The correlation to the S&P 500 was very tight until the beginning of February. Since then, the S&P has continued higher while CF industries is trending lower. If they should recouple with the S&P falling, then the 1400 level at the beginning of the year seems a reasonable retracement target. Of course the correlation could be permanently broken. There is no need at this point to bet on it reverting. Wait for the price action to show you what it will do - but be prepared.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.
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Is Fertilizer UnCoupling
Published 03/25/2013, 03:20 AM
Updated 05/14/2017, 06:45 AM
Is Fertilizer UnCoupling
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