The fact that the price of copper is showing some life and fresh accumulation can be seen in the shares of Freeport-McMoRan (FCX). This could result in a big percentage move off this recent low.
Access to futures charts can be a problem for some investors so we are using an ETF, the iPath Bloomberg Copper Subindex Total Return ETN (JJC) to show our ideas. JJC's chart (above) shows a long decline, but a shift has been underway since November. Prices just crossed above the 50-day simple moving average, but the slope of the average is still pointed downward. There is a base in the On-Balance-Volume (OBV) line, which is encouraging.
Last, there is a great-looking bullish divergence in the bottom panel from November to January between the lower lows in price and higher lows on the momentum study.
In this chart of FCX, above, we can also see a long decline. While FCX has not closed above its 50-day moving average, yet, it is pointed in the right direction. The OBV line is showing a strong uptrend in January, telling us that buyers are more aggressive. Also, we can see a bullish divergence similar to the JJC chart between weak prices and improving momentum. FCX could catch a stronger bid and rally to retest the $10 level, which acted as support in the August to September period. Not a bad percentage move!