Bears Want to Stick a Fork in Freeport

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It has been a while since we took a look at copper mining giant, Freeport McMoRan. As long-time readers of my work know, Freeport has been a useful “tell” for me in terms of the broad market direction over the past few years, although as 2011 progressed that tell has become increasingly murky. Back in January, I made this video for 12631 members making a fairly bold call that the monthly chart of FCX flashed an ominous “dark cloud cover” pattern. I extrapolated that Freeport had most likely topped out for the foreseeable further.

As it turns out, that marked a multi-quater top to the stock, as you can see on the weekly chart below. Consistent with Freeport being a good (but early) “tell,” it topped out several months in front of equities as a whole. Presently, Freeport is trying to stabilize after a steep decline. However, the risk of downside continuation remains high, given the apparent rising wedge nearing completion. As much as I want to have a reason to look for and play a major bottom in Freeport, I have little evidence to do so, yet.

You can also bet that bears are looking to crack $35 here, which should bring in more sellers as price breaks below this weekly rising wedge. I am not sticking a fork in Freeport McMoRan, but my risk/reward analysis has me waiting until the bulls can get this back above $40 before I become interested again on the long side, anytime soon. As far as being a tell, thus far all Freeport has done is confirm the S&P 500’s higher lows since early-October. In and of itself, though, that is not enough of a reason to declare a major bottom.

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