FCX: Cup & Handle

I can't post much due to my poor eyesight, but I thought I'd update FCX.

A week ago, The Bulls managed three closes back inside the broken 2011 Falling Wedge, but that was all that they had. They got sent back for a retest of the 41.20 breakdown low which, thus far, has held at Monday's 41.455 low for an attempt at a Double Bottom.

The width of this possible Double Bottom is very narrow. Picture that all of the candlesticks above Black Trendline #2-#4 are players for The Bears and you'll get an idea of how daunting that resistance was on The Bulls' first bid to get through it. The Bears shorted it and The Bulls who didn't sell the technical breakdown took advantage of the reflex rally to broken support, and sold. The proverbial "everyone" was a seller.

As skimpy as this possible Double Bottom is, at least The Bulls have established short-term support at 41.20-41.445, so if the stock can move higher, The Bears are under a little bit of pressure to Buy To Cover their positions as the stock moves away from the lows. The August 17 high of 47.59 is the pivot for the Double Bottom which "should" bring in some short-covering if The Bulls can manage to take it out.

I don't try to predict what a stock "will do." I try to focus on what it "is doing" and early yesterday morning, FCX was heading south again.





To the left of the chart, the pattern in blue is a Descending Triangle. The lows were 42.70...42.69...42.68. Descending Triangles tend to be bearish, especially in stocks that are in a bearish trend, like FCX is. There were three "hits" to each of the trendlines and the pattern finally resolved to the downside, as one would expect in a downtrend.

After the selloff from the Descending Triangle breakdown, however, The Bulls were able to establish a Cup & Handle pattern, the highs of which (42.70 and 42.66) were right at the bottom of 42.70...42.69...42.68 Descending Triangle resistance. Notice the nice width of the cup portion of the pattern. As is often the case with Cup & Handles, the handle of the pattern (in yellow) was a Bull Flag that hovered near the top of the pattern.

After the upside breakout, FCX pulled back for a retest. I placed my order for 5,000 shares at 42.67 (white up arrow), just above the 42.66 high of the right lip of the cup. "They" filled me in batches over the next five minutes following my order entry and gave me only 4,999 shares. LOL. The retest lows ended up being 42.67 and 42.66, so The Bulls nailed that one!

The Cup & Handle breakout put 43.20 IN PLAY.

42.66 - the more conservative of the two highs of the cup
42.11 - the low of the cup

42.66 - 42.11 = 0.55 points added to the breakout above 42.65 (the trendline had a slight downward slope)

52.65 + 0.55 = Target: 43.20 IN PLAY

After the successful retest of the Cup & Handle breakout, The Bulls formed and broke out of another Bull Flag (pattern in orange), putting 42.96 IN PLAY

42.86 - high of the flag
42.69 - low of the flag

42.86 - 42.69 = 0.17 points of upside on a breakout above 42.79

42.79 + 0.17 = Target: 42.96 IN PLAY

Since the larger pattern (Cup & Handle) target of 43.20 was IN PLAY, I didn't sell any when the 42.96 Bull Flag target got MADE, but since FCX is in a downtrend, I did sell at the white down arrow, to defend against a possible Double Top at 43.10. The 43.20 Cup & Handle target ended up getting MADE, and The Bulls managed to take the stock to a high of 43.54 on the session.

We'll see if The Bulls can do anything with this possible Double Bottom basis the daily chart, but yesterday's bullish pattern construction after the Descending Triangle breakdown and selloff is the type of thing of which we would like to see a ot more from The Bulls in the days and weeks ahead.



Gain: $2,000