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Mosaic Stock Could Piece Together Big Monthly Returns

·2 min read

The shares of Mosaic Co (NYSE:MOS) have been in selloff mode since their mid-April peak near the $79 level. While MOS has shed roughly 43% since then, it's managed to maintain a solid 14.1% year-to-date lead, as well as a year-over-year lead of 41%. Even better, the chemical concern just pulled back to a key trendline on the charts, that's been a boon for the equity in the past.

The trendline in question is Mosaic stock's 260-day moving average. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, the equity has come within one standard deviation of its 260-day moving average after a lengthy period above the trendline two other times in the past three years. While this doesn't seem like much, the stock enjoyed positive one-month returns after both signals, and averaged a hefty 23.5% jump in that time frame. From its current perch at $44.53, a similar move would put Mosaic stock just above $55 -- an area it hasn't touched in over a month.

mos chart july 11
mos chart july 11

The security could be due for a round of bull notes. Of the 15 in coverage, seven still consider the equity a "hold" or worse. Meanwhile, short interest has been on the rise, up 20.1% in the last reporting period, though it still makes up just 3.6% of the stock's available float.

There's been a bearish shift in the options pits, too. While calls are still outnumbering puts on an overall basis, the security sports a 50-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) that sits in the 85th percentile of its 12-month range. In other words, puts have been picked up at a quicker-than-usual clip, and an unwinding of this pessimism could put more wind at MOS' back.