Why Traders Should Avoid Deere Stock This Month

DE's recent rally could lose steam in the next few weeks

Deputy Editor
Mar 2, 2022 at 1:28 PM
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Deere & Company (NYSE:DE) stock is up 10% year-to-date, but traders should tread lightly this month, as the farm equipment maker appears on Schaeffer's Senior Quantitative Analyst Rocky White's list of 25 worst-performing S&P 500 Index (SPX) stocks for March. What's more, the company could be impacted by the Ukraine-Russia war via its partnership with engine manufacturer Cummins (CMI), which maintains an office in Moscow.

Last seen up 4.7% to trade at $375.34, Deere stock sits at fourth on White's list of SPX stocks that yield the worst returns this month, according to data going back 10 years. In the last decade, DE averaged a loss of 1.7%, and finished higher just twice. The equity is the worst industrial engineering stock to own, with sector-peer Caterpillar (CAT) also landing on the list albeit with much tamer losses.

Deere stock traded as low as $326.75 on Feb. 24, right around the $320-$330 range that has been tested now three times in the last 12 months, per the chart below. The shares have executed a nifty v-bottom pattern since then, but still remain below their post-earnings bear gap levels from Feb. 18. 

DE Chart

Options traders have been focused on puts. Over the last 10 weeks, 1.13 puts were picked up for every call at the at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), a 50-day put/call volume ratio that stands higher than 99% of readings from the last year. 

 

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