Terra Industries

TRA

Company. "Terra Industries Inc. is a leading international producer of nitrogen products and methanol. The company employs approximately 1,140 people in North America and the United Kingdom, and is headquartered in Sioux City, Iowa." (company website)

Buy. Terra Industries popped up in the screen for stocks making a new 52-week high with double normal volume.

TRA has been climbing steadily since September, 2003. It peaked at the beginning of April, 2004, then pulled back almost 30%. It has now recovered completely, as reflected by the new high (see sidebar).

The 50-day moving average (blue line) turned upward about three weeks ago and is climbing steadily.

The upward trend is strong: the ADX indicator (black line) is rising steadily, and buying pressure (green +DI line) is rising and is substantially greater than selling pressure (red -DI line).

Money flow (CMF) into TRA has been strengthening for over a week.

The one thing that makes me a bit cautious is today's "hanging man" chart formation. On the other hand, the overall market was down sharply today, so the fact that TRA closed so closed to the open should be a sign that the bears have been held at bay, at least for the day.

Sell. In an otherwise dreary and discouraging market, Terra Industries has been a bright spot in my portfolio. It has continued to chalk up nice gains while other stocks have tanked or been erratic to say the best. When my gains got over 20% I decided to protect them by putting a trailing stop on to sell if the price fell more than 2%. The condition was reached today, and the order executed at market (which turns out to be the low so far today ~argh~).

TRA is still looking very strong in general, but today's gap up to open was followed by drifting lower. This could well be a sign of an impending short-term correction, which would not be surprising. After all, the price of TRA has doubled since the pull-back in May-June. At my sale price, it is 27% ahead of the 50-day moving average, which is quite a ways.

Even a sizeable correction would bring TRA just back to break-even for me, but why leave more than 20% profit on the table? Can't think of a good reason.