Agrium Inc. (AGU) closed last Friday just above the weekly downtrend, line a. AGU made a high in 2011 of $99.14, but traded as high as $113.88 in 2007.

• Minor upside targets in the $93.50 area with further targets in the $98-$99 area
• Weekly relative performance, or RS analysis, is above its rising weighted moving average (WMA) but still below the resistance at line b
• Weekly on-balance volume (OBV) has already broken out to new highs and is acting stronger than prices
• Volume was double the average daily volume on Friday, and the daily OBV (not shown) is positive
• There is initial support now at $84.50 with further support at $81.70-$82.50

The weekly chart of Mosaic (MOS) does not look as strong as that of AGU. MOS had an early-2011 high of $89.24, but traded as high as $163.45 in 2007.

• There is short-term resistance at $59.75, which was the February high
• If it is overcome, the 38.2% Fibonacci retracement resistance stands at $61.80 with the 50% level at $67.02
• The RS line is trying to bottom out, line e, and would look much better with a higher close this week
• The daily RS line (not shown) is above its weighted moving average
• Volume was strong on Friday, and the weekly OBV shows a potentially bullish formation after turning up from its weighted moving average
• A move in the OBV above resistance at line f would be very bullish
• There is first support at $56-$56.80 with more important support in the $54.50-$55 area

What It Means: As I wrote on Friday, the weekly analysis for the Select Sector SPDR Financial (XLF) and Select Sector SPDR Energy (XLE) has turned positive. This should be very supportive for the overall market, and if the materials sector can join in as well, it is likely to provide a better floor underneath the market.

The strong volume action is consistent with a short-term low, but any pullback may be slight.

How to Profit: For Agrium (AGU), go 50% long at $84.92 and 50% long at $83.84 with a stop at $80.76 (risk of approx. 4.3%). Cancel the order if $89.40 is hit first. Sell half the position at $92.66 and raise the stop on the remaining position to $85.72.

For Mosaic (MOS), go 50% long at $56.94 and 50% long at $56.14 with a stop at $53.72 (risk of approx. 5%). Cancel the order if $59.50 is hit first. Sell half the position at $62.42 and raise the stop on the remaining position to $56.72.

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