Back on Dec. 21 we looked at the charts of Freeport-McMoRan (FCX) and recommended, "If you want some exposure to copper prices without the futures market volatility you could go long FCX at current levels risking to $21. The $35-$40 area is our target."
Shares of FCX touched $39.10 Monday so one Real Money subscriber asked for an update. Let's check.
In this daily bar chart of FCX, below, we can see how the shares have rallied in the past two months. Even with a pullback to our recommended entry level in late January, prices subsequently roared ahead to new heights. The shares are trading above the rising 50-day moving average line and above the rising 200-day moving average line.
Trading volume has increased in the past two months and that is a good sign telling us that more investors are attracted to the stock. The rising On-Balance-Volume (OBV) line is another positive development.
The Moving Average Convergence Divergence (MACD) oscillator crossed to the upside earlier this month for a fresh outright buy signal.
In the weekly bar chart of FCX, below, we went back 10 years to see if there were any clues about potential resistance. Prices did hold in the $25-$45 area for about two years before declining into a low in early 2016. Some chart watchers will suggest that this $25-$45 area is chart resistance but since it was so many years ago I treat it as only psychological resistance. The slope of the 40-week moving average line is positive.
The weekly OBV line is bullish and so is the MACD oscillator.
In this daily Point and Figure chart of FCX, below, we can see a new price target of $55. Not bad.
Bottom-line strategy: Even though there is a fair amount of talk about a new commodity "super cycle" on the internet, I think money management and trade management is always a good idea. Traders who are long FCX have made nice profits in a short period of time. Take some profits. Raise sell stops to $31 and raise your price target on the balance of your position to $55. A decent pullback will probably be a buying opportunity.
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