FCX: Ahead Of Earnings

Yesterday morning's two bullish pattern targets, the Ascending Triangle target of 51.94 and The Bullish Channel target of 52.08 both got MADE, but that was all that Bulls had. The session high was 52.11 and at that high (second white arrow), the candlestick reversed and closed back below the 51.85...51.81...51.87 Triple Bottom resistance (horizontal white line).

From yesterday morning:

"The white arrow at the bottom of the channel was a third "tag," so that's now validated support (51.23). That's a plus for The Bulls, as long as they don't let The Bears take it out to the downside."

What also was important about that 51.23 low of yesterday morning's Falling Channel was that it's very near the 51.21 low of the Right Shoulder of the Bullish Inverse H&S pattern in the daily chart, which we'll look at next. That Right Shoulder low of 51.21 got taken out on the early move down to 50.97, which "shouldn't" happen with H&S patterns. That's a serious technical flaw. In the afternoon going, we can see that The Bulls tried to hang onto the 51.20's (horitontal orange line) to establish that they owned it again, but the effort wasn't any good. The Bears took FCX down to a new low on the day and The Bulls weren't able to regain 51.21. The close was 51.17, finishing the session on a "dumb note," below 51.21 Right Shoulder support.



The 51.21 low of the Right Shoulder of the Bullish Inverse H&S pattern on March 22 was very significant. It was a trendline validation of the Bullish Falling Wedge breakout, and it also was the low of a Bullish Hammer session. Those two factors were the primary reasons that I first played the long side of FCX on March 23 and why I continued to play in and out of the long side until April 11, when we broke the 56.64 neckline of the H&S top in the 10-Minute chart, and when we also broke the Rising Channel (which also turned out to be a Bearish Wolfe Wave with a Wave 5 Double Fakeout Breakout). I made a couple of more stabs at the long side near the 53.00 neckline, but ended up throwing it in when it appeared that the neckline would get taken down, which it did.

We can see at the red arrow above Thursday's session, that after Bears broke the neckline, they established it as resistance when The Bulls tried to rally back above it. "On a technical breakdown below support, former support 'should' become resistance on a retest." It did. That failed retest high is 53.08.

When The Bearish Wolfe Wave target got reached within three cents on April 13, I considered that target MADE. This ain't rocket science. We can see though, that in yesterday's session The Bears were able to take FCX down well below the target line, which was at 51.31, so they got some extra points out of it.

With Friday's take down of the 51.21 low of the Right Shoulder, and CLOSE below it, that means that literally everyone who bought FCX at that VERY bullish low, or higher, and who still is long FCX has a paper loss in the stock. So, ALL of the last month of trading represents a near-term "overhang of supply" of sellers.

Needless to say, The Bulls are very badly positioned heading into earnings. Players who bought FCX for the long-term obviously won't sell into rallies, but many short-term players will. If FCX blows out earnings and beats everyone's expectations, no matter how big the stock gaps up ... to the 53.00 neckline ... to the 55.00 gap ... it will be a gap up directly into a one month overhang of supply (willing sellers, who would like to get out of the stock with a break even, smaller loss, or a small gain). If FCX gaps up above 58.75, okay then, we're talking something else! LOL.

Bottom line: A lot of technical damage has been done the chart on this smackdown from 58.75. The Bulls have some significant repair work to do.