How to Mine Freeport-McMoRan's Short-Term Strength

 | Jul 17, 2017 | 1:48 PM EDT
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fcx

Freeport-McMoRan Inc. (FCX) made a lopsided double-top pattern in November and January and then corrected to the downside from February to June. Prices have made a small rounded or saucer-like bottom pattern since early May and we should see some further near-term gains. However, new highs don't seem the cards right now if I am reading the charts correctly.

Traders should continue reading to the bottom but investors may want to take a pass until a bigger base develops.

In this daily bar chart of FCX, above, we can see that prices are above the flattening 50-day simple moving average line and above the rising 200-day moving average line. The daily On-Balance-Volume (OBV) line peaked in December and moved lower to June, signaling more aggressive selling behavior until recently.

To move much higher on the charts FCX will need more aggressive buying with heavier volume seen on days when FCX closes higher. The Moving Average Convergence Divergence (MACD) oscillator is in a bullish mode and recently above the zero line.

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In this weekly chart of FCX, above, we can see how prices have traded above and below the 40-week moving average line. It won't take much of a price rally to put FCX back above the 40-week line. The weekly OBV line is neutral, unfortunately. The weekly MACD oscillator is poised for a cover shorts buy signal.

The saucer bottom on FCX is seen more easily on this Point and Figure chart, above. Prices have reached one price target and it will take a trade at $13.86 to give us another breakout and higher price targets.

Bottom line: FCX is likely to rally further in the short-run but I do not currently see a big enough base to support gains above $17, the 2017 high.

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