Let us cut right to the chase. No one can deny that the market has been correcting for the past five weeks or so. The real issue is whether we will stabilize and settle into some kind of broad trading range (2004) or whether we are on the cusp of a major breakdown (2008).
From my vantage point, at the heart of the answer is whether we will see another round of steep deflation, or instead whether reflation will continue. Seeing as I am skeptical of manipulated government data as well as dorky, lagging indicator economists, I would rather trust the way the market negotiates one stock in particular.
Freeport-McMoRan Copper & Gold Inc. (Public, NYSE:$FCX), is a prominent, large capitalization copper miner, as well as dealing with gold and molybdenum. They are a fairly well run firm. Looking at the chart of the stock in multiple time frames, it has become apparent to me just how good of a tell–and leading indicator–the stock has been with respect to the broad market. If we are going to have another deflationary crash, or instead will reflate (or inflate), this stock will tell us in advance, given its mining interests.
Thus, with the uncertainty and choppiness of the current market environment, I will keep $FCX on my screen, irrespective of whether I ever trade it. As I am writing this, the stock is sitting on a significant support level. To break down through it would be a very bearish signal.
1984.
nice
Nice post btw.
I think it was Harry Schultz who turned me on to watching Freeport as a barometer. (he was the guy who allegedly coined the term Stagflation. Nutty newsletter, but with the occasional gold, er copper nugget)
As with you, 90%+ in cash here, just waiting and watching. A little nibble of VXX here and there in the meantime, and some ever-decaying SRS for self-flagellation.
thanks tx–good stuff
i am regular reader..you are a nice addition to IBC
i can only trade rydex mutual fund.
whats your suggestion, i am waiting to see how you position yourself in coming day.
bill
Thanks, Bill. I am just waiting for the market to become more attractive for swing trading. Right now, it is till a daytraders market. So, regardless of your trading instruments, I think cash is king until we get a better picture.
just bought some puts yesterday ……………,
some kind of feeling ……,
like your post !
I hear you!
Thanks Chess, I’ll add this to my watchlist.
no prob kenai
Kenai = VALE does a similar dance closer to home for you I think.
You mean for the TSX? I’m in Canada…
Thanks for your insightful posts – I appreciate them very much!!!
Just an observation that FCX is completing the 50MA & 200MA death cross – signal of future moves?
Excellent point–the death cross looks inevitable at this point–BEARISH
Enjoy your work, thanks. Regarding FCX, according to Tom Demark’s TD Sequential Countdown method, it is approximately 1 day from becoming a buy candidate which would dovetail with your conclusion that support is near and hopefully will hold.
That is a bold call for him to make. I am trying to be as objective as I can, but I do believe the bears have the edge in this name. I will keep an open mind, being in 100% cash.
Thanks for reading.
I’m thinking FCX could be a good straddle play. The options are rich but this baby can move! This position eliminates having to make a directional decision at a critical juncture. No stops needed, let her run…..
I like that idea.
Great post :
Will keep an eye on FCX as I try to decipher this market.
Watching RUE, thought it might run today but turned tail
and is now below opening price.
I should add, regarding the TD Sequential “Buy” signal on FCX
. We have a 12 countdown to a buy. In order to trigger the 13 cd buy signal, tomorrow’s close will have to be below the low two days ago. Should be interesting to watch.
Google “Tom Demark” to learn more about his various tools. Essentially, this method measures an exhaustion move in a stock, in this case to the downside.
Chess – Great post. Having tells for various markets and conditions is absolutely essential. I love the monthly and weekly charts. They really put everything into perspective.
The leaders are running and I’m picking my entry points.
Northing over a 1/2 position right now but the patterns are there so I’m turning off my braining and trading what I see.
More to come if the market behaves.
Great post as always. Still over 90% cash but picked up some starter positions in high divie nat gas. Still liking TLT and VXX for hedge. Interested to follow G 20 meeting this week- talk about stress!