We know that China has been very weak of late, and the charts of copper and premier copper miner Freeport McMoRan seem to be reflecting that global softness as well. On the weekly chart of FCX above, note how unlike the V-shaped move off the low-$30’s in 2011, this time around price is leaning down against this major support area. Simply put, bears will argue the current technical setup is a bear flag waiting to break much lower for a major crack, while bulls are arguing this is a sound, coiled base off of which we will spring much higher. Bears will also argue that a major head and should top is in play, but of course confirmation below the low-$30’s is required.
I do not see much of a trade here yet, as copper appears to be reflecting the broad market indecision we have seen in many areas.
Thanks Chess 😉
Good post. I’m long Freeport right now. Obviously I am of the belief that the upside outweighs the downside. I’m not a chartist, but I like it from a valuation standpoint. In addition to the nearly 4% yield.
That’s the big question here. Since June, the latest HG & FCX tests of support found the trendline of a symmetrical triangle. (Zoom out further to 2q10 on your chart.)
I liked the bullish development of longer-term technical indicators (weekly & monthly) and I liked the chances of physical trading higher toward resistance if it works into the vertex of that triangle… so I’m long JJC: http://thebuttonwoodtree.wordpress.com/2012/06/27/spx-metals-update-bull-reversal/
I bought 6/27 at a double bottom & the aforementioned trendline support. I’m barely in the black after today, and I’m not willing to hold if we break JJC 42.50 tomorrow. Such a breach would trigger a big breakdown, with the bear flag prevailing.
Looks like a multiyear H&S to me.
A convincing break under ~$30 could be devastating not only for FCX but the wider market considering this name is considered a bellweather for overall macro health.
I have been watching this pattern for months now–thanks for all of your great work, Chess.
I’ve been tracking that H&S w right shoulder around 10/2011:http://thebuttonwoodtree.files.wordpress.com/2012/06/hg-bouncing-off-trendline-support-target-i-doubt-hs-materializes-but-with-weekly-indicators-bullish-hg-should-rally-to-symmetrical-triangles-trendline-resistance-3-601.jpg
That rt shoulder resistance lines up well with trendline resistance from the symmetrical triangle, at which I’d be happy to sell JJC +8.5%.