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if you ask any dedicated bearish technician, such as Tim Knight, what his favorite short setup is, my best guess is that it would look something like Freeport McMoRan’s daily chart. Note the key $46 level that I had been discussing was breached during the swoon. Since then, we have seen a fairly standard retracement back up to the scene of the breakdown on light volume. The crux of the issue right now is that all-too-familiar scenario since March of 2009–Whether the vast array of current bear flags and short setups are actually legitimate this time, or whether they are simply another set of vicious traps for bears to find themselves in as the cyclical bull marches on.
If you are looking for an accurate gauge of this litmus test, I believe Freeport is as good as any. Not only has Freeport been a fairly reliable market leader over the past few years, but this particular chart setup should give us great insight as to whether we see the bulls hop back over $46, or whether we head back down for a fresh leg lower.
Watch it closely.
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Looks like this is going to be the end of the bounce. I am selling my longs here.
I’ve been watch FCX lately as well and agree it has lead the market in the past and got short on it today. It fell much harder than the SPY since late July and has risen less lately, unable to take the 10 day ema.
Thanks for this post.
started a position in TZA.