FCX And SCCO

(Click on charts to enlarge, then click on them again for better viewing. Use left arrow at the top of your browser to return to the narrative)

From pre-market comments yesterday:

" The high of the third trendline validation was 54.84, so The Bulls want to take that out to the upside. That would put the recent high of 55.25 IN PLAY, as well as a measured move of about 55.58 IN PLAY."

Both of those Bull Flag targets got MADE yesterday morning, but not without Ms. Market acting positively evil first, as is her wont ;)

FCX gapped higher at the open for the Bull Flag breakout, then came all-ll the way back and filled the opening gap AND took out the low of the Bull Flag by just two pennies (red arrow)! That's another one of those "shakeouts," which are so annoying, but FCX then reversed off the bottom of the flag, and the targets got MADE. Whew!

Later in the session, FCX put in a Double Bottom in the 54.70's (horizontal orange line), but that failed and the retest of the breakdown also failed (orange arrows). That was followed by an attempt to break out of a Falling Wedge (pattern in yellow), but that also failed (lower yellow arrow), and down she went into the close. THUD.



"Take profits, or at least 'some' profits, when targets get MADE." In this particular case, due the fact that FCX has enjoyed a nice rally of 20% in under three weeks, and that it was trading in the zone of the sizeable "overhead supply" that we discussed yesterday, I sold all of my shares that I purchased on Friday for 54.45 when the 55.25 Bull Flag got MADE, and...



... I also sold all my shares that I purchased on March 24 for 53.95 when the second Bull Flag target of 55.58 got MADE.

Gain on the session: $2,400. Gain on the six closed trades since March 23: $6,150.

The Bullish Inverse H&S target of 60.42 in the daily chart still in IN PLAY, so during the afternoon selloff, I bought back 500 shares of the shares that I sold in this account in the morning, just to keep my hand in the game. I paid 54.58 for them, which was a one dollar discount to the price for which I sold them. I'm willing to give back some of my nice gains as a sacrifice to the market gawds since FCX still is above the Inverse H&S breakout, but I intend to hang onto a good chunk of those gains ;)

I'm now long 500 shares of FCX from 54.58 with a paper loss of $250.

In addition the sizeable overhang of supply that we've got in FCX, another factor in deciding to curb my enthusiasm about repurchasing any more than 500 of my shares is the chart of sector-related Southern Copper Corportation (SCCO).



YUK!

Sector-related stocks don't necessarily trade in tandem with each other, as evidenced by the fact that FCX is a much better looking chart than this one, but they often do "trade in sympathy" with each other, at least for a short while.

As we can see, (1) SSCO has completed a H&S Top, (2) failed TWO retests of the broken neckline, at Yellow #2 and Yellow #4, during the formation of an Ascending Triangle (the pattern in yellow), (#3) broke down below the Ascending Triangle, and (4) when I took this screen shot around 1:30PM yesterday afternoon, SCCO was threatening to break down out of the Bearish Rising Wedge (pattern in red). Perfectly dreadful looking!

I was of half a mind to short SCCO right here when I took this screenshot, but that didn't seem very sporting of me since FCX has been so good to me on the long side in recent sessions. LOL. SCCO finished the session with a breakdown below the Bearish Rising Wedge and it fell fifty cents from this screen shot into the final gong, so shorting 1,000 shares of it "would have been" a nice little gain of $500.

MARKET LESSON #1: Between the opening and closing gongs, steel yourself to your own emotions and to any thoughts you have about what you "think" Ms. Market should do, and to what you would "like" Ms. Market to do. Ms. Market Rules! If you don't FOLLOW what she is telling you, like these THREE Bearish Pattern breakdowns, you will NOT pass go and you will NOT collect the $500.

MARKET LESSON #2: Stop making jokes about it, Melf Elf, you moron. You're not funny.



Since the neckline of the Bullish Inverse H&S has a downward slope of a penny and a half, we "move the chains" by that amount each session, so it comes in today, March 29, at 53.185. Important support (or resistance) often gets violated by a penny or three (sometimes a little more), as we witnessed when Ms. Market took out the Bull Flag low yesterday morning, by two pennies (red arrow in the first chart). Those are known as "shakeouts," which are devious attempts to talk us out of a good position. Anyone who used Friday's 54.39 low as a "hard stop" got shaken out when Ms. Market took FCX down to 54.37, then rallied it to the 55.58 Bull Flag target. UGH. If one were shaken out at 54.37, one might be inclined to say something worse, like "Curses!!!"

If, for example, FCX has a fast selloff one morning, violates the neckline, but then bangs higher, that's fine, at least for the time being. For another example, look at the March 23 candle, which was the 51.21 low of the Right Shoulder of the Bullish Inverse H&S pattern. That candle also was a SECOND successful retest of the Bullish Falling Wedge trendline. FCX banged right off there, then put in a Bullish Doji Star Hammer. That was very, very nice.

When we're long a stock, we never enjoy seeing it go down, but if the Bullish Inverse H&S target of 60.42 is going to get MADE, a successful retest of the neckline certainly would be very helpful, as would be ANY trendline validation, like the two failures to regain the broken neckline at Yellow #2 and Yellow #4 in the SCCO chart. Ms. Market told us, "Yes, I've told you TWICE now that the broken neckline IS validated resistance. What else do ya wanna know?" LOL.