In a Real Money column on March 1, I recommended the long side of Southern Copper Corp (SCCO) and then updated the charts on April 11.
SCCO shares made a new 52-week high on Tuesday so let's check out the charts again.
In the updated daily bar of the continuous futures contract of copper, below, I can see a constructive-looking picture. Prices have just moved above the 50-day and 200-day moving average lines. The slope of the 50-day has yet to turn positive.
Copper prices are still well below their February highs but SCCO just made a new 52-week high. What gives? Mining companies tend to lead the movement in the underlying metal. Why? Simple -- If you believe copper (or gold or silver or other metals) is going higher in price but you are not sure when you would buy the unleveraged mining company before buying a leveraged futures contract. With a futures position the timing is key. With the equity position we just remain patient.
In the daily bar chart of SCCO, below, I can see that the share price made a new high for the move up. SCCO trades above the rising 50-day moving average line and above the rising 200-day line.
Trading volume has been more active from November and the On-Balance-Volume (OBV) line has been in a rising trend for the past year and tells me that buyers of SCCO have been more aggressive than sellers. The trend-following Moving Average Convergence Divergence (MACD) oscillator is in a bullish alignment above the zero line.
In the weekly Japanese candlestick chart of SCCO, below, I can see that the shares have made a large upper level base pattern covering the past two years plus. Prices trade above the rising 40-week moving average line.
The weekly OBV line drifted lower from early 2021 but it looks like it is showing renewed strength. The MACD oscillator is above the zero line and turning upwards to a fresh outright buy signal.
In this daily Point and Figure chart of SCCO, below, I can see the upside breakout and a potential price target in the $98 area.
In this weekly Point and Figure chart of SCCO, below, it projects a price target in the $115 area.
Bottom-line strategy: Traders should continue to hold earlier purchases. Raise stops to $74. The $98 area is my new price target with $115 a longer-term objective.
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