2 replies to this topic

[Jhoe]

The technicals on FCX are very interesting to me, as well as relative performance YTD vs industrial/precious metals and even the broader equity markets. Despite the washout last week in the metals complex, you still have 10-20% YTD gains across the board for gold, silver, copper et al. Benchmark US stock index gains are slightly lower, but still at least 10% or so. However, right now you can get long FCX at basically where the stock started 2012. Now what makes the trade interesting is that I am NOT a precious metals bull. I'm not even bullish on prices of industrial metals like steel, copper, etc. Obviously if you are bullish on gold, copper etc. FCX should look like a no brainer given the relative performance YTD. Obviously the flip side is what if metals, stocks in general do NOT continue to perform this year, and even end the year in the red? If FCX has barely performed YTD given the gains in equities and metals, its unlikely it would fare any better if those seemingly bullish correlations (or mysteriously lack thereof?) dont persist. The wave count is where I'm really focused right now, not just the ST, but looking out over the last 12-18 months on a daily chart. After trading down to the high $28's in fall 2011, the stock made what appeared to be a pretty clean a-b-c corrective move back towards its 2011 highs, and was abruptly halted at the .618 retracement just below $49 ($61.34-28.85 was the 2011 decline I'm referring to). And as expected, the stock's made a significant move lower since hitting that $49 area in early 2012. Since then, we've had what COULD be another a-b-c move, this one of course downward, and retracing about 50% of the rally off of the late 2011 $29ish low. Now the bear case is pretty obvious. Seemingly clean a-b-c up suggests the rally was corrective in nature, not a change in trend. And if we started a new 5 wave impulse move from $29ish, which does not appear to be the case to me, the stock shouldn't have traded below the wave 1 high of $43.50 at any point after wave 3 was confirmed when breaking above that point. So, ruling out for now that we are in bull mode for FCX in terms of wave count, there's still money to be made trading corrective waves. I've seen a LOT of classic 3-3-5 corrections the last 6 months or so, probably the easiest for me to trade has been JPM (JP Morgan chase). Classic 3-3-5 pattern since trading down below 28 bucks in late 2011, with the typical multiple bottom reversal leading to this breakout back above $40 in recent days. So with that in mind, could FCX be in the process of a 3-3-5 corrective wave up as well? If so, we've had a 3 up, we've now had 3 down, now we would look to see a pretty sharp rally back above 44 or so, without even a .50 retracement along the way, to signal a 5 wave impulse pattern is occurring, and bigger picture, the "5" of a 3-3-5 is in play. I think you can use a 3 wave count to try and enter FCX long when wave 1 = 3, which would occur just below $38. So far, the stock has traded down to $38.53 as of yesterday, just about its low of 2012. And the price action today has been lousy at best in FCX, so I dont think you need to rush out into this one above 39 either. But again, the risk/reward looks pretty good to try getting long if it gets down to $38 or lower, and of course, it is possible that the rally from $28 to $49 was wave 1 of a new 5 wave impulse move upwards too. So wave 2 typically retraces to a .5 or .618, and those levels are 38.90 and 36.50, respectively. I will update if/when I enter a position in the stock. Interested if anyone has existing positions or other thoughts on FCX too.

[andiron]

I will ask Dr copper// lousy chart..China funk...i would avoid it..or short it

[Jhoe]

I will ask Dr copper//

lousy chart..China funk...i would avoid it..or short it

thanks for your thoughts. I did avoid it, I wasn't about to jump in at 39/39.50 where it was when I posted this topic last week. But I did take a shot just below $38 yesterday. Going to hedge with some puts though, no reason not to with vix/delta so cheap at the moment. And now that the stock has moved a couple % points in my favor (we're at 38.60ish as I'm posting this), the short term puts out in April are starting to look cheaper by the second. This is a tricky situation though, because I do like to hedge my trading book at all times, especially individual stock trades (as opposed to using index or macro hedges against individual stock longs). But I also don't like to buy options, hedge or no hedge, at a strike I don't think the stock can move through. For example, I can buy april $36 puts right now with FCX at $38.60 for 85/90 cents. But in theory, the stock needs to trade down to $35ish just for that hedge to breakeven by expiration. And if I thought the stock had downside to $35ish, I wouldn't be buying the shares at $37.90ish. Now if the stock can move back above $40, and I can buy protection at the $37/38 area for the same price, thats a different story.