Freeport-McMoRan Is Doing Better Than We Thought It Would

 | Aug 08, 2017 | 11:53 AM EDT
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fcx

We reviewed the charts and indicators of Freeport-McMoRan (FCX) in the middle of July. We were bullish but not big bulls: "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."

Prices have firmed over the past three weeks to cross above the rising 200-day moving average line and generate a higher Point and Figure target. Let's see what has changed/improved.

In this updated daily bar chart of FCX, above, we can see prices rallied sharply in the latter part of July in the start of what will probably turn out to be a bull flag formation. Prices are above the rising 50-day and 200-day moving average lines. A bullish golden cross of these averages could happen in the weeks ahead if the price strength continues.

The daily On-Balance-Volume (OBV) line made a low in June and has improved, suggesting that buyers of FCX have been more aggressive. The Moving Average Convergence Divergence (MACD) oscillator gave an outright buy signal in early July as it moved above the zero line. The two averages that make up the indicator have narrowed but they may not cross if prices continue their July rally.

In this weekly bar chart of FCX, above, we can see prices are back above the rising 40-week moving average line. The weekly OBV line is showing some slight improvement and the weekly MACD, after signaling a cover-shorts buy in early July, is ready to cross the zero line for an outright go-long signal.

In this Point and Figure chart of FCX, above, we can see a price target of $21.50 is shown. A trade at $17.50 will be a fresh breakout.

Bottom line: Continue to trade FCX from the long side looking for a recent flag formation to break out on the upside and propel prices to new 2017 highs.

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