The quiz of 9/29 reflected that key support was at hand, suggesting a buying opportunity. (see original quiz post) The quiz found Freeport McMoran (FCX) on support dating back almost 15 years. Last week FCX rallied over 20% off its lows, as Copper had a strong week.
Now check out the pattern below…
CLICK ON CHART TO ENLARGE
Copper formed a rather large bearish rising wedge in May, suggesting a two-thirds chance of lower prices. FCX reflected a good time to harvest at a series of lower highs this summer, then it bounced off of support this past week dating back 10 years and now it is up against its 23% Fibonacci resistance and a falling channel line. Was last week a short covering rally in the Copper/FCX arena or something bigger?
FCX fell almost 40% in 6 weeks, almost twice what the 500 index did. A macro message can come from FCX and JNK below!
CLICK ON CHART TO ENLARGE
I prefer to chart the High yield mutual funds over JNK/HYG, yet wanted you to see what was happening with JNK of late. High yieldS have been pounded of late and jnk’s OBV is down to the 2008 lows…interesting rally off of line (1) today! I will update the high yield funds in the next two days.
Barcelona…Copper did experience its worst one month decline in 25 years. FCX has seen a good rally last week, yet I wouldn’t be surprised to FCX make a run at its 38%-50% level before it runs out of gas.
Chris, do you see similarities between the BPGDM oversold levels in 2010 and 2011 and how it may coorelate to a likely play in FCX to the upside this time as well? When the bounces happened in gold, copper seems to have also benefited during the same periods.
Thanks!
cjk…as usual, great comments and observations on your part, per the different price action of the junk ETF’s compared to the high yield funds. If the high yield movement is for real, the high yield funds will end up reflecting it. When they crossed key moving averages in 2008-2009, yields on them were above 12%. Investors that bought them picked up a sweet yield and net asset value appreciation going forward. Just as they dropped 50% a few times this past decade they will do it again….they also crossed above moving averages sending a buy signal in the past and they will send another buy signal too.
Chris
Resistance is resistance…it pays to protect values or harvest at resistance.
I do not understand charts , and i am blank . what would be your suggestion sir ?
Apurv….What is your take on FCX?
Chris – interesting that some of the high yield corporate mutual bond funds I track were not up at all yesterday and most were up just a fraction of a percent in contrast to the etf JNK.
On another note perhaps the dollar tested long-term falling support yesterday and held – wondering if it established a new short-term support line? Well, another day another dollar : )
Thanks for all of your charts.
cjk
Dear Mr.Chris ,
So now where do you think would be the next leg of fcx ?
Tristan…I do like the longer viewpoint for sure. Biggest reason I like them….they don’t get pushed around by volume and the performance is smoothier. If you get a chance lay a fund on top of the etf and you will see the difference. If using moving averages as a tool to buy or sell, tons less “false signals” in the funds compared to the ETF’s.
Thanks for your viewership and this question,
Chris
Chris, I like your work.
Why do you prefer charting the High yield mutual funds over JNK/HYG? Because they have a longer track record?
Harvesting at resistance.