Oh, Deere

Dec 6, 2007: 3:38 PM CST

Deere and Company (DE) has been perhaps an overlooked giant the last few years. While people have been focusing on high-flyers like Amazon (AMZN), Research in Motion (RIMM), Google (GOOG), and Apple (AAPL), Deere has been creating similar patterns and similar price appreciations.

Their 2 for 1 stock split earlier this week made the stock more attractive to the masses by appearing ‘cheaper’ and becoming psychologically a ‘better value.’ Nevertheless, the demand for stock in Deere and Company appears very high.

Let’s start with the amazing weekly chart:

  • The moving averages are in the most bullish orientation (20 above 50 above 200)
  • There has been, and continues to be a comfortable space between the 20 and the 50 (moving average)
  • The large green arrows indicate the large price space between the key moving averages (very bullish)
  • The small green arrows indicate textbook pullbacks to support at the rising 20 period moving average
  • Price carved out a new momentum high with the amazing recent price swing following a test of support
  • Price is (extremely) overextended and buying at this level probably is not the optimal strategy unless you’re a long-term investor
  • The lower prices (due to the split) and supreme uptrend (tripling in value in two years) will likely create large demand for the stock, resulting in higher prices yet to come

The daily chart is a bit extended also at the moment:

  • Notice the horizontal ‘strong’ support line at $70.
  • Price made an (obvious) new momentum high
  • Price is at the upper boundary of a potential trendline and the Bollinger Band
  • Price appears (gut feeling) to be cresting at the peak of the most recent wave and preparing for a temporary down-wave to retest at least $80.
  • If price is too strong to retest $80 soon, look to establish a long position in this potential ‘run-away’ market
  • The moving averages (no surprise) are in the most bullish orientation possible

Consider the fundamentals and news related items before considering long-term investment in Deere and Company, but from a technical standpoint, we have a candidate for a few trades due to the strong structure of the prevailing uptrend.

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