AGCO Continues Its Climb Higher on the Charts

For his second “Executive Decision” segment of Thursday’s Mad Money program, Jim Cramer spoke with Eric Hansotia, chairman, president and CEO of AGCO Corp. (AGCO) , the agriculture equipment maker.

The company just delivered a monster $1.31-a-share earnings beat that included a 22% rise in revenues.

Hansotia said it’s been a record year for AGCO, thanks to new technologies and innovations. These are dynamic times, he said, and AGCO has been working to manage supply chains to keep components flowing and equipment heading to their customers.

The invasion of Ukraine has major impacts on the world’s food supply, Hansotia added. That’s why AGCO is helping farmers in any way they can to ensure that seeds get planted and crops get harvested. AGCO has employees on the ground in Ukraine and is supporting them as well.

With more acres coming online in other countries to help fill the gaps, having technology and automation is more important than ever.  

On October 14 we reviewed the charts of AGCO and wrote that “Aggressive traders could go long AGCO on strength above $130, risking to $119.”

Let’s check out the charts and indicators again. 

In this updated daily bar chart of AGCO, below, we can see that AGCO finally broke out above $130 in February. Prices are now trading above the rising 50-day moving average line and above the bottoming 200-day line. The 50-day line is about to cross above the 200-day line for a bullish golden cross buy signal.

The On-Balance-Volume (OBV) line turned much stronger in early February and tells us that buyers of AGCO have been more aggressive. Trading volume has been increasing the past three months as prices have risen – classic old school chart reading.

The Moving Average Convergence Divergence (MACD) oscillator is in a bullish alignment above the zero line. 

In this weekly Japanese candlestick chart of AGCO, below, we can see a bullish picture. Prices are trading above the bottoming 40-week moving average line. The most recent white candle (bullish) has a very small upper shadow so I expect further strong gains. Trading volume is increasing as AGCO’s bullish message is getting out to investors.

The weekly OBV line has turned upwards and the MACD oscillator is about to cross the zero line for an outright buy signal.

In this daily Point and Figure chart of AGCO, below, we can see the upside breakout at $136 and a $161 price target. 

In this weekly Point and Figure chart of AGCO, below, we used a five box reversal filter. Here the chart shows us a $191 price target. 

Bottom line strategy: Traders who are long AGCO should continue to hold and consider adding to the position on strength. The $161 area is our first target with $191 after that. Risk to $125 now.