A couple of my astute readers correctly pointed out that $FCX had a notably weak session today. As you know, Freeport-McMoRan Copper & Gold Inc. has been one of my key broad market “tells” for quite some time, due to the fact that it is a well run, mega cap firm that deals in economically sensitive commodities.
Today, $FCX was down 4.70% on above average volume. Under normal conditions, I would consider this to be a prima facie case (on its face) of a bearish omen for the broad market. However, I am reticent to do so for a few reasons. For starters, today’s price actions brings the stock back the same area from which the stock broke out higher on heavy volume back in late July. Despite how scary today may have been for $FCX longs (I have no position), the fact that the July 21st gap (denoted on the daily chart below) was filled can be seen as a constructive sign of the stock backing and filling.
Moreover, the stock created another gap today, as you can see that today’s price action is completely below all of yesterday’s trading. As a general rule, the market tends to fill gaps (common gaps). Of course, there is the possibility that today marked a breakaway gap to the downside, and we will see the stock press lower. However, I believe all of the value players who supported $FCX throughout this summer in the low to mid $60 range will not give up so easily.
With the broad market registering oversold by many indicators, I am skeptical of blindly relying on $FCX as a tell in this situation.
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Excellent as always Chess.
yup, good stuff
its 1040.5 not 1039.5
Time will tell. Thanks for the hard work.