FCX: "Chinese Slowdown To Crush Copper"

I'm not interested in stock market fundamentals, but I'm very interested in the market's REACTION to those fundamentals, e.g, earnings, analyst upgrades/downgrades, news on the economy, etc. You will understand why by the end of this post.

If "good news" doesn't get played out as such in the chart, it ain't good news. Conversely, if "bad news" doesn't get played out as such in the chart, it ain't bad news.

We've had numerous examples during the past several months of "good news" in FCX, the REACTION to which wasn't good. like: (1) numerous analyst upgrades, (2) good earnings, and (3) the May 11 one dollar dividend distribution. FCX still went down on "good news," to a low near $46 in May, and to a low near $47 in June.

We've also had some "bad news" during the past few weeks, the REACTION to which wasn't bad, like (1) Dennis Gartman's June 16 call to sell copper, and (2) Societe Generale's rather grim call on copper, on June 27:

"Things Might Get Ugly For Copper
Gregory White | Jun. 27, 2011, 7:38 AM |


Watch for a Chinese slowdown to crush copper, warns Societe Generale."

Dennis Gartman's June 16 bearish call did result in a one-day selloff in FCX, but the low on the session was a trendline validation of SUPPORT at the bottom of The Bull Flag/Channel and the session was a doji star hammer that was confirmed as a Bullish Doji Star Hammer on the June 28 Triple Breakout. Gartman's bearish call was a low in FCX.

Who knows what the future holds, but it was the shorts who got crushed last week on Societe Generale's call, not copper. As with Gartman's call, FCX sold off the morning of the call (June 27), but that selloff also was a low in FCX, establishing Data Point #4 of the Symmetrical Triangle (Purple #4), nested within the Falling Channel. Intraday on June 27, FCX formed and broke out of a Triple Top/Ascending triangle, and the remainder of the week was up...up...up, off Societe Generale's bad news for a "Chinese slowdown to crush copper."

I don't have a clue whether or not copper will get crushed at some point in the future, like Societe Generale warned early last week, but I do know when I see a bullish Triple Breakout through Triple Validated Resistance, which immediately followed their call, and I do know when I see six upside targets get MADE on "bad news." Those pattern targets are done, irrespective of what happens from here with the price of copper.

You see my point, and it certainly isn't to demean Dennis Gartman or Societe Generale (Dennis has made many fine calls over the years, by the way). I don't criticize others. I make plenty of mistakes of my own. My point is that if we don't see good news or bad news played out that way in the chart, be very suspicious, and also consider fading the market's initial reaction to the news if that's indicated in the chart, like it was on the afternoon of June 27 and on the morning of June 28 when the charts were breaking out to the upside on bad news.

That's known as making a "counterintuitive" play in the market. It's playing something this is contrary to what one would think makes sense: "BUYING FCX when Societe Generale tells us to "watch for copper to get crushed? That doesn't make any sense!" It makes sense if we FOLLOW the chart and ignore Societe Generale's PREDICTION.

Watch the market's REACTION to the fundamentals. Analyst/Guru opinions of the fundamentals quite frequently are "red herrings," i.e., something that distracts our attention from what's really going on, which can be seen in the chart.