Is Deere About to Run? How to Play the Agriculture Rally
When investors refer to momentum stocks, they’re nearly always referencing technology. Tech stocks have a long history of bull markets and rallies that have yielded spectacular returns for investors, at least until the momentum fades.
That fade is in full effect now, as the Nasdaq Composite consolidates a massive gain that occurred from mid-April of 2025 through late April 2026. Over that stretch, the tech-heavy index gained over 50%.
The Nasdaq has now been in consolidation mode for four months (shaded yellow). We’re not bearish on the Nasdaq, but the momentum has moved elsewhere for now.
Momentum Is Where You Find it
While the Nasdaq Composite continues to tread water, some investors are focusing on an area where momentum is alive and well. It may come as a surprise that agriculture is in a powerful momentum mode right now.
Rising agricultural prices are nothing to celebrate, as consumers will undoubtedly feel that pain at the supermarket and restaurant. It’s also another reason to believe that the Fed is behind the curve on raising interest rates, as consumer prices continue to rise faster than the 2% target rate.
Amber Waves of Grain
Meanwhile, for momentum investors, amber waves of grain and green candles go hand in hand. The Invesco DB Agriculture Fund ($DBA), which lists corn and wheat futures contracts among its largest holdings, just reached its highest level in over 10 years.
Note the heavy volume on DBA’s recent rally (shaded yellow), an indication of the possible presence of institutional buyers. Since institutions tend to buy over time as opposed to all at once, this means that the current momentum in this sector could continue.
How We’re Playing it
I’m going to attempt to harness the momentum in agriculture by opening a position in Deere and Co. ($DE). On Monday, Deere closed at a six-month high.
Deere has spent the past six months forming a saucer pattern (shaded yellow). The stock is trading just shy of its all-time high, which is visible on the left side of the formation (arrow).
The pattern suggests that Deere shares could rise to $800. That figure is also the target price placed on the stock this week by Baird, which raised its rating on Deere from neutral to outperform.
Baird’s analyst believes that farmers are likely to benefit from the rising prices mentioned above. Some of that profit could be used to purchase equipment manufactured by Deere.
Risk Management
In any momentum situation, holding a loss is prohibited. If a buy is based on momentum, traders must be prepared to exit the trade when that momentum disappears. It always disappears eventually, so traders should always be prepared to hit the eject button.
At the time of publication, Ponsi was long DE.
