What's Up With John Deere?

This thing was a monster off the October lows. Deere & Co rallied over 50% in just 4 months. This sort of action needs to correct, or consolidate somehow before it can keep rocking. This is especially the case when the long-term 200 day moving average still has a downward slope.

The low for this correction came in early June at a standard 61.8% Fibonacci retracement from the previous up move. Very normal and healthy. Meanwhile, this gave the 200-day moving average enough time to flatten out and begin to move higher. The price action has been constructive as well. Higher lows for 2 1/2 months running.

I was over at Bloomberg on Tuesday afternoon talking technicals in this particular name. The other guys interviewed weren't big fans of the stock. I think the important thing here is to accept the positive correlation that Deere has with Equities. You have to like the market if you want to be involved. And we still like stocks here. Check out the video:

 
I think based on all of the information that we have, we still need to give the bulls the benefit of the doubt. If the uptrend line from the October lows starts to break, then we'll have to reevaluate our positive stance. But a breakout above 83 would get me even more excited about Deere. Here's the chart:

Source:

John Deere 3Q Earnings Out Tomorrow (Bloomberg)

Tags: $DE $SPY