FCX: Rally To The Top Of The Falling Wedge

From early this morning:

"Near-term Resistance:

Despite that body of evidence for a rally, The Bulls aren't out of the woods. There's some serious nearby overhead resistance with which they must contend:

1. 52.30 - that was the May 10 pre-dividend distribution high of the rally off Blue Data Point #4 that failed, just below the bottom of Kumo (Cloud) resistance.

2. 52.475 - the bottom of Kumo (Cloud) resistance, currently

3. 52.665 - the top of the Falling Wedge (Trendline #1-#3). The downward slope of that trendline is 0.17385, so we subtract that amount each session to determine the location of that trendline.

We'll see what The Bulls can do here, given that resistance."

This morning was the fifth gap up opening in FCX in as many sessions. The Ascending Triangle target of 52.28 got MADE in pre-market and FCX traded at 52.30 and 52.46, just below Resistance Level #2. Level #3 resistance (52.665) got printed in the first two minutes of trading, where the early morning high of 52.70 got put in, just a few pennies above the top of the big Falling Wedge in the daily chart.

At the open, I put in an order to sell short 5,000 shares at 52.62, just below the top of the Falling Wedge, and was fortunate enough to get filled. FCX has enjoyed a very nice rally off the 46.06 low, but this morning's gap up opening looked marked for at least some kind of gap fill, if not a "Gap And Crap" session.

I covered my short position at 51.82-51.83, in the 51.73-51.90 gap (the white horizontal lines).



Gain: $3,900

FCX: Rally To Resistance

From last week:

"The Ascending Triangle breakout puts an upside target of 52.28 IN PLAY.

Math For The Ascending Triangle:

49.17 - (The more conservative of the 49.17 and 49.19 highs)
46.06 - (Low of the pattern)

49.17 - 46.06 = 3.11 points of upside, added to 49.17.
49.17 + 3.11 = Target: 52.28 IN PLAY.

Anecdotally, it's interesting that the 52.28 target is so close to where the Bearish Rising Wedge terminated on May 10: 52.30."

The Bulls did an excellent job last week, rallying from a low of 46.67 on Monday to a high of 51.90 on Friday, very near the Ascending Triangle target of 52.32 that is IN PLAY.

Notice that there were a number of strong technical factors supporting the rally and that it wasn't just some "random walk" higher. The better "the body of evidence" for any rally or selloff, the better the chances are that it will occur.

The Body Of Evidence For Last Week's Rally:

1. In the prior week, The Bulls put in a Bullish Evening Star, one of the most bullish patterns in the candlesticks.

2. Basis the intraday charts, Tuesday's gap up opening left all of Monday's trading as a Bullish Island Reversal in the charts (see chart posted last week for a visual on that).

3. Wednesday's gap up opening was a gap back inside the BIG blue Falling Wedge. Whenever trading occurs that is back inside a pattern that has broken out or broken down, it always is a "knuckle-biter" for the team that is expecting a continuation in the direction of the breakout or breakdown.

In this particular case, Wednesday's gap up opening was a "knuckle-biter" for The Bears, who were expecting a downside continuation from Quintuple Resistance (the red arrows), after the technical breakdown of the BIG blue Falling Wedge, on May 11.

4. Wednesday's gap up opening quickly turned into a lot more than just a "knuckle-biter" for The Bears. It also was a technical breakout of an Ascending Triangle, crossing above the 49.17 - 49.19 highs of that pattern.

5. When FCX printed 49.51 on Wednesday, ALL of the highs of "Quintuple Resistance" had been taken out to the upside. When validated support or resistance gets taken out, that usually has "some" significance. We can see that, indeed, it did.

There were additional bits of evidence from technical indicators, like the MACD, and from intraday patterns in the charts, but these factors alone were pretty powerful evidence of some kind of rally toward the Ascending Triangle target of 52.28 and toward the top of the Falling Wedge.

Near-term Resistance:

Despite that body of evidence for a rally, The Bulls aren't out of the woods. There's some serious nearby overhead resistance with which they must contend:

1. 52.30 - that was the May 10 pre-dividend distribution high of the rally off Blue Data Point #4 that failed, just below the bottom of Kumo (Cloud) resistance.

2. 52.475 - the bottom of Kumo (Cloud) resistance, currently

3. 52.665 - the top of the Falling Wedge (Trendline #1-#3). The downward slope of that trendline is 0.17385, so we subtract that amount each session to determine the location of that trendline.

We'll see what The Bulls can do here, given that resistance.

Chart Structure:

A few comments on that subject, since we've got a good example here.

Beginning with the HUGE white candle on March 15, notice that all of the moves in FCX have been pretty much straight up and straight down. The straight up rally off Blue #4 didn't get very far since the stock banged its head on Kumo (Cloud) resistance.

The Ascending Triangle formation, below the bottom of the Falling Wedge, is the type of thing to which I am referring when I say, "I'd like to a nice structural foundation for a rally" or "I'd like to see a base formation from which to launch a rally."

SPX: Double Validated Resistance

(Click on charts to enlarge. Click on them again for further enlargement. Use back arrow on your browser to return to narrative).


Nested Patterns (a pattern(s) within a larger pattern) that break out or break down tend to be a bit more reliable than individual patterns, as far as having some follow through on the breakout or breakdown.



The SPX al-lmost filled the April 18 gap (the minimum downside expectation), then morphed into a Channel/Falling Wedge and went up to retest the Double Breakdown.

The index managed to rally back inside the Rising Channel from which it broke down, but failed at Trendline #1-#3 of the Symmetrical Triangle on a near-Doji Star Hangman. When the low of that Doji Star Hangman was taken out in the next session, that was confirmation that Trendline #1-#3 had been validated as resistance, and was an excellent, low-risk place to initiate a short position. Stop the trade out if the high of the Doji Star Hangman gets taken out to the upside.

Also consider getting long if the high of the Doji Star Hangman gets taken out to the upside. Validated resistance "shouldn't" get taken out to the upside, like the Quintuple Resistance that recently got taken out to the upside in FCX. That particular upside takeout also was an Ascending Triangle breakout in FCX. Great place to enter a long position.



On the second selloff in the SPX, from validated reistance, the April 18 gap target of 1312.70 did get MADE.

"Take profits, or at least 'some' profits, when targets get MADE," and we can see here a very good reason for doing that: the SPX is ba-a-ack at the top of The Channel/Falling Wedge, putting some pressure on The Bears. Those who shorted and held short the May 16 Double Breakdown at 1333.17 have been in the position for two weeks and have scored only two points as of Friday's 1331.10 close.

The Bears are perfectly justified for holding short the SPX. Friday's high was within less than a point of the top of the Channel/Falling Wedge, so resistance held and that's now DOUBLE validated resistance. The Bears need to take out Friday's low for additional confirmation.

Where The Bears can get themselves into trouble is if that DOUBLE validated resistance gets taken out to the upside, and particularly if the 1346.44 high of the May 19 Doji Star Hangman gets taken out to the upside. That was the initial validated resistance and that "shouldn't" get taken out. It's a "logical stop" on a short trade for a Buy To Cover the position.



Basis the Ichimoku Kinko Hyo chart, the top of Kumo (Cloud) resistance is rising and came in on Friday at 1331.94. The Bulls penetrated it intraday on Friday, with a high of 1334.62 and the 1331.10 close was just below it, within a point.

If I were coaching The Bulls, I would have them give up some ground early in the coming week, then go up and knock out the Double Validated Resistance. They've got room in The Channel/Rising Wedge to allow The Bears to back it up some.

As the chart stands, though, it's Advantage: The Bears.

EDIT: I forgot to mention that in addition to the Symmetrical Triangle target of 1291.18 still being IN PLAY, 1294.70, just above that, also is IN PLAY. That's the low of Black Data Point #3 in the Rising Channel/Bearish Rising Wedge that broke down on May 16. We'll see if that becomes a factor if The Bears resume the selloff.

FCX: More On Cup & Handle Patterns

(Click on charts to enlarge, then click on them again for further enlargement).

Notes are on the charts, for easier reading. In the second chart, note particularly the H&S Top pattern that resolved to the UPSIDE. Those are unusual patterns, but they can be helpful in determining upside targets, as we've seen a couple of times in the FCX intraday charts.

FCX: Cup & Handle & "Chart School"

This is from Stockchart.com's "Chart School." I made a few comments in BOLDFACE.


1. Trend: To qualify as a continuation pattern, a prior trend should exist. Ideally, the trend should be a few months old and not too mature. The more mature the trend, the less chance that the pattern marks a continuation or the less upside potential.

NOTE: THE UPTREND IN FCX WAS ONLY DAYS OLD, BUT DESPITE THAT AND THE INTERVENING DESCENDING TRIANGLE (PATTERN IN WHITE), THE CUP & HANDLE TARGET OF 51.35 GOT MADE AT FRIDAY'S OPEN OF 51.38 (ORANGE ARROW).

2, Cup: The cup should be "U" shaped and resemble a bowl or rounding bottom. A "V" shaped bottom would be considered too sharp of a reversal to qualify. The softer "U" shape ensures that the cup is a consolidation pattern with valid support at the bottom of the "U". The perfect pattern would have equal highs on both sides of the cup, but this is not always the case.

NOTE: ARGUEABLY, THE BOTTOM OF THIS CUP WAS A BIT V-SHAPED, BUT IT WASN'T STRAIGHT DOWN, THEN STRAIGHT UP, LIKE A "V." IT'S UP TO THE INDIVIDUAL ANALYST HOW STRICT THEY WANT TO BE ABOUT THESE THINGS. I LIKE TO BE AS FLEXIBLE AS POSSIBLE, WITHOUT IMAGINING SOMETHING THAT REALLY DOESN'T EXIST AT ALL.

3. Cup Depth: Ideally, the depth of the cup should retrace 1/3 or less of the previous advance. However, with volatile markets and over-reactions, the retracement could range from 1/3 to 1/2. In extreme situations, the maximum retracement could be 2/3, which is conforms with Dow Theory.

4. Handle: After the high forms on the right side of the cup, there is a pullback that forms the handle. Sometimes this handle resembles a flag or pennant that slopes downward, other times just a short pullback. The handle represents the final consolidation/pullback before the big breakout and can retrace up to 1/3 of the cup's advance, but usually not more. The smaller the retracement is, the more bullish the formation and significant the breakout. Sometimes it is prudent to wait for a break above the resistance line established by the highs of the cup.

NOTE: THIS HANDLE WAS A SYMMETRICAL TRIANGLE (PATTERN IN RED).

5. Duration: The cup can extend from 1 to 6 months, sometimes longer on weekly charts. The handle can be from 1 week to many weeks and ideally completes within 1-4 weeks.

NOTE: MY FEELING IS THAT THE HANDLE SHOULDN'T DRAG ON AND ON AND ON. IT SHOULD FORM OVER A PERIOD OF TIME THAT IS "REASONABLY" SHORTER THAN THE FORMATION OF THE CUP, LIKE THE HANDLE IS THIS CHART. AGAIN, THAT'S UP TO INDIVIDUAL INTERPRETATION.

6. Volume: There should be a substantial increase in volume on the breakout above the handle's resistance.

7. Target: The projected advance after breakout can be estimated by measuring the distance from the right peak of the cup to the bottom of the cup.
As with most chart patterns, it is more important to capture the essence of the pattern than the particulars. The cup is a bowl-shaped consolidation and the handle is a short pullback followed by a breakout with expanding volume.

As with most chart patterns, it is more important to capture the essence of the pattern than the particulars. The cup is a bowl-shaped consolidation and the handle is a short pullback followed by a breakout with expanding volume.

NOTE: I WHOLE-HEARTEDLY AGREE WITH THE BOLDFACED COMMENT. THURSDAY, WE HAD A H&S TOP, THE RIGHT SHOULDER OF WHICH WAS HIGHER THAN THE LEFT SHOULDER. THAT'S A "NO-NO" ACCORDING TO THE ORTHODOX RULES OF A H&S TOP, BUT THE TARGET GOT MADE, REGARDLESS.

"IF IT WALKS LIKE A DUCK...QUACKS LIKE A DUCK..."

Hope this link to chart school's example of a Cup & Handle works:

http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:chart_patterns:cup_with_handle_cont

FCX: Short-term Support And Resistance

From yesterday morning:

"Given yesterday's bullish Ascending Triangle breakout, it seems reasonable to expect FCX to get to 51.275 - 51.29 at a minimum. That price area is about 68% of the 52.28 target that is IN PLAY. Rather pitiful if The Bulls can't at least do tha-a-at. LOL."

It looked like The Bulls were going to get there yesterday afternoon on the Cup & Handle breakout above 50.58, but The Bears stepped in with a 1-2 Punch: The H&S Top and The Bearish Rising Wedge (seen in the next chart), so The Bulls came up short at 51.00, the morning high.

That's fine. The Bulls have some room for a pullback, between here and Trendline #2-#4, the bottom of the Falling Wedge. In fact, if that trendline where The Bulls formerly met up with Quintuple resistance were to be successfully retested, that wouldn't be bad at all. That would establish "former resistance, as support."



From yesterday afternoon:

"The 50.35 low of The Handle (and The purple Symmetrical Triangle) is important support."

After a pattern breakout, in this case The Symmetrical Triangle, in purple, we don't like to see the low of that pattern get taken down. The upside target for this pattern got MADE (add twenty-three cents to the point of the breakout), but this pattern also was the "handle" of the Cup & Handle formation.

We can see how the significance of that 50.35 low played out after the failed Cup & Handle breakout: (1) 50.34 was the low when the H&S Top target got MADE; and, (2) 50.33 was the low when the Bearish Rising Wedge (pattern in orange) broke down, and the target of 50.34 (the bottom of the pattern) got MADE.

Additionally, 50.33 is now validated support (white arrow) since FCX bounced higher off the trendline connecting the 50.35 and 50.34 lows.




Coming off the 50.80 high of the H&S Top, at White #1, the late day pattern is a Descending Triangle, with the Bearish Rising Wedge nested within it.

Near-term DOUBLE RESISTANCE for the Descending Triangle, interestingly, looks to be right about 50.58 (yellow arrow), which were the highs of the Cup & Handle: (1) It's the bottom of the broken Rising Wedge (Orange Trendline #1-#3); and, (2) it's the top of the Descending Triangle (White Trendline #1-#3).

If FCX should rally to roughly 50.58 and fail there, then break the 50.35...50.34...50.33 validated trendline, that would suggest about forty-five cents of downside, so roughly 49.90 IN PLAY.

If FCX should rally or gap above 50.58 and hold above it, that would put the Cup & Handle target of 51.35 back IN PLAY unless/until something else develops, e.g. the H&S Top and the Bearish Rising Wedge showing up late yesterday afternoon.

FCX - Cup & Handle Failure

The Bulls couldn't hold 50.58. The trading after the Cup & Handle breakout has the look of one of those unorthodox Head & Shoulders Tops that we've seen so many times. The Right Shoulder is higher than the Left Shoulder, and it "shouldn't be," but the pattern had the same net effect of an orthodox H&S Top: FCX sold off a measured move of a little over twenty cents.

The last rally was a Bearish Rising Wedge. That failed, too, and FCX returned to the bottom of the wedge, prior to the close.

FCX: Cup & Handle Breakout

Today's Patterns/Features:

1. Gap-Filling Channel selloff (in white)

2. Channel contains a Bear Flag that broke down at the yellow arrow

3. Horizontal Support (pink horizontal line) got broken at the pink arrow. As the chart stands, that was a Bull Shakeout/Bear Trap

4. Cup & Handle (in orange) had identical highs of 50.58 and 50.58.

5.The handle formed, which was a Symmetrical Triangle (pattern in purple). The Symmetrical Triangle had a little false breakout, then the bottom of the pattern was successfully retested at the purple arrow, for a trendline validation., then the Cup & Handle broke out to the upside.

The Cup & Handle puts an upside target of 51.35 IN PLAY, as long as FCX trades above 50.58. The 50.35 low of The Handle (and The purple Symmetrical Triangle) is important support.

Math for the Cup & Handle:

50.58 - High
49.81 - Low

50.58 - 49.81 = 0.77 points of upside added to 50.58
50.58 + 0.77 = Target: 51.35 IN PLAY

51.35 is very near the 51.29 low of the May 11 gap.

FCX: Ascending Triangle And Bear Trap Set

This is a drawing of a Symmetrical Triangle in the recent trading in FCX, starting with a high at White #1, at 49.50. What I didn't like about this pattern interpretation is the fact that Tuesday's high of 49.19 (white arrow) is a false breakout.



If we begin to label the chart with White #1 at the 46.06 low (I forgot to label the chart), we have a flat top for an Ascending Triangle, with the highs of 49.17 and 49.19. After yesterday morning's breakout to 49.71, those 49.17 and 49.19 highs got successfully retested early in yesterday's session (white arrow), with reaction lows of 49.20 and 49.21, both of which were validations of support. We know how important that can be when we get validations, speaking of which...



The quintuple validation of resistance (five red arrows) finally got taken out yesterday. After the gap up opening, FCX put in a low of 49.00, pennies below blue Trendline #2-#4, validating it as support, then rallied smartly. The Ascending Triangle breakout puts an upside target of 52.28 IN PLAY.

CAUTION: Targets that are against the dominant trend are less likely to get MADE. Witness: The pre-fifty cent dividend Ascending Triangle that morphed into a Bearish Rising Wedge that terminated at 52.30, just below the bottom of the Kumo, on May 10. The Ascending Triangle/dividend payout on May 11 ended up being a $3.50 Smackdown in FCX, below Trendline #2-#4.

Math For The Ascending Triangle:

49.17 - (The more conservative of the 49.17 and 49.19 highs)
46.06 - (Low of the pattern)

49.17 - 46.06 = 3.11 points of upside, added to 49.17.
49.17 + 3.11 = Target: 52.28 IN PLAY.

Anecdotally, it's interesting that the 52.28 target is so close to where the Bearish Rising Wedge terminated on May 10: 52.30.

Also in proximity are the 51.29 low of the May 10 candle, prior to the gap down, and the 51.275 Kijun-sen in this Ichimoku Kinko Hyo chart. Given yesterday's bullish Ascending Triangle breakout, it seems reasonable to expect FCX to get to 51.275 - 51.29, at a minimum. That price area is about 68% of the 52.28 target that is IN PLAY. Rather pitiful if The Bulls can't at least do tha-a-at. LOL.

Optimistically, if The Bulls eventually can go up and knock out Blue Trendline #1-#3, all of the trading below Trendline #2-#4 is a fairly sizeable Bear Trap. The trap is set with FCX trading back inside the big blue Falling Wedge, but the trap isn't sprung unless FCX breaks out of it to the upside, ala The St. Paddy's Day Falling Wedge breakout.

FCX: Quintuple Resistance And GS

Goldman Sachs (GS), whose chart has been perfectly dreadful lately, gave an upgrade of the commodities yesterday. The upgrade gave FCX and commodity-related stocks a nice pop.

Notice that all four of the recent pattern technical breakdowns in Goldman were excellent shorts. All of them were on a gap down, and none of the gaps has been filled to date.

There are some other comments on the chart, on the technicals.



The Goldman upgrade sent FCX back to Trendline #2-#4, where The Bears again defended it, establishing QUINTUPLE resistance. The problem for The Bulls is that all of the candles inside the big blue Falling Wedge (and prior to that formation) represent a goodly number of shareholders who are very disappointed that the great earnings, the fifty cent dividend and all of the analyst upgrades haven't done anything for FCX. Many of those shareholders want out of a losing position, plain and simple, and they know the drill. Yesterday's rally above 49.00 was a "rinse and repeat." Weak-handed longs took the rally as an opportunity to get out of the stock. That has nothing to do with the value of FCX. That's technical selling. Sell at resistance.

On the positive side:

1. The May 16-18 3-day pattern does have the look of a Bullish Morning Star, which is one of the more bullish patterns in the candlesticks.

2. The candles below the Falling Wedge form an Ascending Triangle (the flatish top is off a bit, but it's close enough just using yesterday's 49.19 high and the May 20 high of 49.17).

3. The Ascending Triangle contains a Bullish Island Reversal in the intraday chart, coming off Data Point #4 (see next chart).

4. If The Bulls can mount a rally a take out the top of the Falling Wedge (Trendline #1-#3), all of this trading below Trendline #2-#4 will be a Bear Trap, similar to what we had at the left of this chart, March 10-14.

The top of the Falling Wedge also is the top of the Kumo (Cloud), so FCX would be back in Bull Territory if it can get up there. That's getting ahead of ourselves, but it's the kind of thing that The Bulls need to do.



The circled area (Monday's trading) coming off Data Point #4 is the Bullish Island Reversal. The candles are detached from the prior session and also detached from yesterday's session. It isn't necessarily bearish if that gap gets filled, but it's much more bullish if it doesn't get filled, prior to an upside breakout. Bears who shorted Monday's gap down and who didn't cover their short would be "stranded on that island" on an upside breakout, which is the purpose of an island reversal.

What we don't want to see is Trendline #2-#4 get broken to the downside. Look at the last Ascending Triangle (the pattern in yellow). It broke out to the upside at the first yellow arrow, then gapped down below Trendline #2-#4 on the fifty cent dividend payout. That gap down was "The Tell" that the Ascending Triangle had morphed into a Bearish Rising Wedge, similar to the April 11 breakdown in the daily chart after the Bearish Wolfe Wave Double Breakout/Fakeout. The May 11 gap down (second yellow arrow) didn't fool around. It was a clear gap down, below that trendline. UGH.

FCX And SLW

From Sunday, on FCX:

"A move below Green #4 would be...UGH."

We got the "UGH" at yesterday's open. The quadruple resistance in the daily chart still dominates.





The current rally in SLW off 32.43 is "a higher high" and "a higher low." That's usually what we like to see in a stock, but not if the pattern ends up being a Bear Flag or a Bearish Rising Wedge.

SLW is in a downtrend and continuation patterns tend to resolve in the direction of the trend, like the two Triple Top patterns circled in black, so we want to be mindful of that and watch Trendline #1-#3 for a possible breakdown, especially since SLW has two downside targets of 32.01 and 29.28 that still are IN PLAY.

That said, SLW certainly could continue higher and the low could be in, at 32.43. We can't know that and simply are watching for any further signs of weakness.

The slope of Trendline #1-#3 in this daily chart is 0.1733, so add that amount each session. It comes in today, May 24, at 36.817, so it will come in tomorrow, May 25, at 36.990.




In the Hourly chart, Trendline #1-#3 is at 33.673 at yesterday's close. The slope is 0.026, so add that amount each hour. At today's close (May 24), the trendline will be at 33.831.

Yesterday, SLW had a nice bounce early in the session, putting in a new high for the move off the 32.43 low, but after squeezing a few shorts, the stock sold off and closed below the 13, 21 and 34 EMA's, which are rolling over to the downside here. That was a weak close, but SLW can turn those EMAs right back up if it can get moving higher today.

SLW: Pattern Morphs

From yesterday:

"Those pattern morphs can be deadly, as we've seen when SLW broke down below a pattern morph at 44.44 on April 11."

Here's the updated chart since the April 11 Rising Wedge pattern morph breakdown.

Including the Rising Wedge, SLW has had four pattern breakdowns (red arrows) and still has two downside targets IN PLAY. Whether they will get MADE, or not, remains to be seen. The stock currently is trying to rally back to the 36.72-36.80 gap. This rally off the 32.43 low looks to be a Bear Flag/Rising Wedge at the moment.

FCX: Quadruple Validated Resistance

(Click On Charts To Enlarge, Then Click On Them Again For Further Enlargement. Use Back Arrow On Your Browser To Return To Narrative)

Last we looked at the FCX daily chart, we were looking to see if the stock could put in a low for Data Point #4 of a pattern, from which it could break out to the upside. We got Data Point #4, but the best that FCX could manage was a rally to the bottom of Kumo (Cloud) resistance where it failed, then broke below Trendline #2-#4. UGH.

Since the breakdown of Trendline #2-#4, we've had FOUR validations of resistance (the four red arrows) at that trendline, the most recent of which was on Friday. At the second one, FCX opened just about smack on the trendline. poked its head above it, then tanked to a new low for the year. UGH.

When the trend is solidly bearish as it is in FCX, the intraday charts can be helpful in showing us what's going on, so let's take a look at the Hourly chart.





Pattern #1 - H&S Top - the neckline was a bit off (the horizontal white line), but the net effect when FCX broke the 54.00 level was a H&S Top. KEY SUPPORT at 53.00 in the daily chart got broken, and down she went.

Patterns #2 and #3 - The Ascending Triangle (#2...in white) that morphed into the Rising Wedge (#3...in red) and broke down on the fifty cent dividend payout at the open on May 11. Those pattern morphs can be deadly, as we've seen when SLW broke down below a pattern morph at 44.44 on April 11.

Pattern #4 - Symmetrical Triangle (in blue). The breakdown sent FCX to a new low for 2011.

Pattern #5 - Bull Flag. Did we say BULL Flag??? Oooo-oo...that's nice. The Bulls finally have done something bullish here ;)

If The Bulls can capitalize on Friday's bullish breakout, that suggests a move up at least toward the dividend gap (horizontal lines, in yellow). Let's look at that Bull Flag breakout a little more closely.



I hesitated to put the 13, 21, and 34 day exponential moving averages (EMA's) on the chart because I'm not fond of moving averages. They can be terribly misleading for reasons that I've posted numerous times in the past, but there you have it. FCX currently is sitting just above those three EMA's at the moment, as we can see in this chart.

The Hourly chart is constructively bullish, poised to move higher. If I were coaching The Bulls, I would have them go down and tag the top of the Bull Flag (pattern in green) on Monday morning, establishing "former resistance as support," then rally like gangbusters above Trendline #2-#4 resistance in the first chart above which, again, is QUADRUPLE validated resistance.

A selloff to the EMA's, then an upside takeout of Friday's high also would be very nice. A move back down inside the Bull Flag would be sloppy ("Ye Olde Knuckle-biter"). A move below Green #4 would be...UGH.

FCX: Morphed Ascending Triangle

(Click on charts to enlarge. Click on them again for further enlargement. Use back arrow to return to narrative).

From May 9:

"If Friday's low gets taken down (White #4 with the question mark in the second chart), or if White Trendline #2-#4 in the second chart gets violated by more than a tad, this Ascending Triangle possibility, as it stands, is scrapped."

FCX had fallen back below the 51.77-51.79 top of the Ascending Triangle (red circle) Tuesday afternoon, and closed there. Yesterday morning's gap down below Trendline #2-#4 negated the Ascending Triangle and was "The Tell" that buying FCX for the dividend capture wasn't any bargain and that the Ascending Triangle had morphed into this Rising Channel, that broke down at the open:







Also from May 9:

"Targets that are against the trend are less likely to get MADE, and the trend is bearish. The bottom of the Kumo (Cloud) comes in today, May 9, at 52.21, so 52.21 - 54.02 is Kumo resistance."

The highs at the top of the Rising Channel (White #4) were 52.30 and 52.28, right at the bottom of Kumo (Cloud) resistance.

Yesterday's action in FCX is an example of the difficulty involved with playing bullish breakouts in charts that are bearish. The pattern also is similar to the Ascending Triangle in Silver Wheaton (SLW) that morphed into a Rising Channel, then broke down at 44.44 in mid-April (see charts on SLW posted May 4 for most recent review of that pattern in SLW).

FCX and NVDA

My 10-month old laptop crashed this morning, so I might be gone for awhile trying to get that sorted out. UGH.

FCX had TWO pattern breakouts yesterday (The Channel and The Ascending Triangle that we looked at yesterday), so it was a good day for The Bulls. 54.11 is IN PLAY as long as FCX trades above the 51.76-51.77 top of the Ascending Triangle. Targets that are against the trend are less likely to get MADE, and the trend is bearish. FCX also is right at the bottom of Kumo (Cloud) resistance (see yesterday's chart), so that must be borne in mind.

After a 4-day "Knuckle-biter," back below the 19.64 Double Bottom breakout, yesterday NVDA broke out of a Cup & Handle formation, basis the intraday chart, and closed back above 19.64. The upside targets are back IN PLAY as long as NVDA trades above the Double Bottom/"W"-Bottom pivot (19.64).

FCX: Ascending Triangle

(Click on charts to enlarge. Click on them again for further enlargement. Use left arrow on your browser to return to narrative).

Very short-term, FCX finished Friday's session trading in this channel, the bottom of which was validated as support at the up arrow, the top of which was twice validated as resistance at the down arrows near the end of the session.

This channel pattern appears in the next chart, in red. Note that Data Point #3 in this chart also is Data Point #4 of a possible Ascending Triangle in the next chart.




Friday's early morning "screamer" to the 51.76 high of the broken Rectangle (pattern in yellow) resulted in a "Gap and Crap" which, far more often than not, is what occurs when a stock stampedes directly in resistance. The entire rally to the early session high of 51.77 got taken down and the gap from Thursday's close got filled. Back to the drawing board...

Structurally, The Bulls have a better chance for a rally here than they did at Thursday's close, when FCX was sitting below twice validated resistance of the broken Rectangle (the pattern in yellow). Although The Bears twice validated resistance at the top of the channel (first chart) late in Friday's session, it wasn't resistance at the bottom of a broken pattern, like Thursday's Rectangle (pattern in yellow).

If The Bulls can take out the top of the Channel (first chart), that's constructively bullish. Next order of business would be to knock out the 51.76 - 51.77 highs of this putative Ascending Triangle (pattern in white). That's getting ahead of ourselves, but if The Bulls can do that, it would put an upside target of 54.11 IN PLAY.

Math for the Ascending Triangle:

51.76 - The more conservative of the 51.76 and 51.77 highs
49.41 - Low of the Ascending Triangle

51.76 - 49.41 = 2.35 points of upside on a breakout

51.76 + 2.35 = Target: 54.11 IN PLAY



The top of the Kumo is at 54.02, very near the 54.11 target that would be IN PLAY should The Bulls pull off an Ascending Triangle breakout. Targets that are against the trend are less likely to get MADE, and the trend is bearish. The bottom of the Kumo (Cloud) comes in today, May 9, at 52.21, so 52.21 - 54.02 is Kumo resistance.

If Friday's low gets taken down (White #4 with the question mark in the second chart), or if White Trendline #2-#4 in the second chart gets violated by more than a tad, this Ascending Triangle possibility, as it stands, is scrapped.

FCX: Market Response To Broken Support

Yesterday's summary comment:

"Given the technical damage done the daily chart, and given the broken Rectangle in the intraday chart, the bottom of which is twice validated resistance, The Bulls have their work cut out for them at today's opening kickoff."

The opening kickoff:



WHACK!

The 50.65 Rectangle target got MADE and was exceeded on the downside. After an early morning gap fill, the remainder of the session was sideways-to-down.



Last nearby support at 49.71 also got taken out intraday, but it held on a closing basis. We "move the chains" for Trendline #2-#4 and watch to see if anything develops. The session finished on a near-Doji Star Hammer, similar to the candlestick at Data Point #2, so we'll see if the Bulls can rally it after the six-session Smackdown.

After the last Smackdown, to Data Point #2, FCX rallied off Kumo (Cloud) support and had the release of earning to help to propel it well above 53.00 resistance.

In the current time-frame, FCX has to rally from Bear Territory without the earnings catalyst into rising Kumo (Cloud) resistance, although it could get some help from a rally in the metals.

FCX: Two Levels Of Key Support Broken

(Click on charts to enlarge. Click on them again for further enlargement. Use left arrow on your browser to return to the narrative).

From yesterday:

"...the 51.95 gap from the session prior to the release of earnings still is IN PLAY from the technical breakdown in the intraday chart above."

KEY SUPPORT near 53.00 got broken again in yesterday's session. The 51.95 target also got MADE, and then some.



Also from yesterday:

"So-o, that 51.92-51.95 area is next KEY SUPPORT on any further selloff."

51.92-51.95 has been broken on a closing basis, so that's two levels of KEY SUPPORT that were broken in yesterday's session. We now are left with "who knows what else" (my final comment at the bottom right hand corner of the first chart). Basis this Ichimoku Kinko Hyo chart ("At A Glance...The Table Of Balance)," FCX is in Bear Territory with The Smackdown Low of 49.71 remaining as last nearby support.

The Symmetrical Triangle in black is a hypothetical of how this "could" turn out bullish. Data Point #4 could go lower, thus the question mark, in which case we'd have to "move the chains" for Trendline #2-#4.

As the chart stands, though, FCX is in Bear Territory with two levels of KEY SUPPORT broken.




By late morning, FCX had settled down and was trading sideways-to-down on decreasing volume. An oversold snapback rally seemed likely so I got long. Given the sharp selloff below 51.92-51.95 KEY SUPPORT, I didn't expect much and sold at 51.45 horizontal reistance (the horizontal red line).



By late session, The Bulls were making an effort to get back to the broken 51.92-51.95 KEY SUPPORT. The effort ended in a Triple Top, at 51.75, then FCX sank to the prior low of 51.18, which set up a Rectangle (pattern in yellow).

The next rally failed, and FCX came back and held support at the bottom of the Rectangle (yellow up arrow). That support didn't hold for long, though. The Bears broke the pattern to the downside and twice successfully defended The Bulls' retests of broken Rectangle support (the two down yellow arrows), so that trendline currently is twice validated resistance. Roughly 50.65 is IN PLAY, as long as FCX trades below that broken trendline.



An example of what The Bulls "could do" to begin to turn things around would be to morph the broken Rectangle in the last chart into this Falling Channel, then break out of it to the upside.

Given the technical damage done the daily chart, and given the broken Rectangle in the intraday chart, the bottom of which is twice validated resistance, The Bulls have their work cut out for them at today's opening kickoff.




Gain on the FCX trade: $1,300
Gain on the 25 FCX trades since March 23: $19,700

RIMM, SLW, NVDA And FCX

(Click On Charts To Enlarge. Click On Them Again For Further Enlargement. Use The Back Arrow On Your Browser To Return To Narrative).

At yesterday's low in RIMM, the H&S Top target of 47.57 got MADE, within two cents. When any target gets MADE, that doesn't tell us anything about "what's next." It simply means "we're done" with that H&S Top pattern. It also means for shorts that it's a good idea to "take profits, or at least 'some profits' when targets get MADE."



This is the chart of SLW that we looked at after we were wondering (question marks on the chart) if the DOUBLE Symmetrical Triangle upside breakouts were Fakeout/Breakouts, or not. The break below Trendline #1-#3 was THE TELL that it, indeed, was a Fakeout/Breakout.

THE TELL often is followed by a significant move in the opposite direction, as we can see in the next chart.



Coming off a little Bear Flag (see next chart) after the Rising Wedge breakdown, SLW initially found support at the gap. The next rally failed, and SLW sold off to the bottom of the Rising Wedge, then broke below that in yesterday's session, so it's still trying to find support.



For review, this is the "Before" chart, which shows the DOUBLE upside Fakeout/Breakout, prior to the "morph" into the Rising Wedge (last chart), and subsequent technical breakdown at 44.44, on April 11.

This chart is one of many examples of why I stress FOLLOWING Ms. Market and looking at what "IS happening," independent of what we think about what the stock "should be" doing, or what we might think about the price of the underlying commodity, etc. When support gets broken, it's not a bad idea to "get outta there," and ask questions later.



From yesterday morning:

"Since we had the confluence of the 19.59 Double Top target (intraday chart), the 19.61 gap (intraday chart), and the 19.64 Double Bottom pivot (daily chart), The Bulls did their job and stepped in AT SUPPORT, thus the 19.63 low.

That sets The Bulls up for a chance at breaking out of the Falling Wedge (the pattern in white) in this chart if they can "bring it" into today's session."

NVDA's gap down opening yesterday, at 19.50, back below the Double Bottom breakout and back below all of that nice support that The Bulls found in the prior session told us that The Bulls didn't "bring it" into yesterday's session.

The "Knuckle-Biter" is on, meaning that anyone who bought the Double Bottom breakout, above 19.64, has a problem. They're sitting with a paper loss with the Double Bottom target of 22.27 ON HOLD, unless/until The Bulls can take NVDA back above 19.64 again, and obviously, there's never any guarantee that they will, thus, The "Knuckle-Biter."

I wanted to get long NVDA if The Bulls could have taken out the top of the Falling Wedge in the intraday chart that we looked at yesterday morning. That would have been a "continuation pattern" breakout to the upside, giving some confirmation of the Double Bottom breakout in the daily chart.

Instead, it was gap down, below support? In a word: YUK. If this is "just a knuckle-biter" and NVDA is going back above 19.64, I'd rather wait for that to occur, rather than become a bagholder and watch NVDA head lower, if the Double Bottom breakout turns out to have been a Fakeout/Breakout.




As we know, FCX has been in recovery mode since the release of earnings, digesting the gains off the The Smackdown low of 49.71, following the Bearish Wolfe Wave and H&S Top breakdowns on April 11. In the last five trading sessions, FCX has been trading sideways, essentially, above 54.00, but it broke below that in yesterday's session and went down and filled a gap left in the chart from last week (horizontal red line).

Gap fills are common, and are to be expected, but the problem with this particular gap fill was that everything above the horizontal white line after the gap fill now is immediate short-term RESISTANCE. All of the players trapped above 54.00 represent an "overhang of sellers," similar to what we've been discussing with respect to the daily chart. The players above 54.00 were expecting the resolution of this consolidation phase to be the UPSIDE, but they didn't get it.



FCX has been good to me on my last 23 trades in the stock on the long side (all of the real-time executions have been posted with explanations, for learning purposes). When I saw the breakdown, I really, really didn't want to short it. That "emotional bias" is a flaw in my trading. I've grown fond of FCX and want to see it do well, and that's a mistake that costs me. I "should have" shorted FCX on the April 11 DOUBLE breakdown, when I sold my core 500 shares at 56.64. I didn't.

"Don't fall in love with stocks. STOP THAT, Melf!"

Okay...okay, you don't have to yell at me. Sheesh.

When I saw the breakdown (I was watching other stocks), FCX already had retested 54.00 (the white arrow), and failed the retest. Next resistance was 53.84 (horizontal red line). Since "those Buzzard Faces" have been giving me fits lately, NOT filling my orders, I placed a limit order to short FCX at 53.81, slightly below the 53.84 resistance, and got filled immediately. FCX got to 53.85, then sold off toward the gap-filling low (horizontal red line).

Despite the fact that FCX looked to be headed much lower given the breakdown below 54.00, which put the 51.95 earnings gap IN PLAY, I covered on the approach to the gap-filling low in the 53.30's, just in case it was a "Fakeout Breakdown."



FCX dipped below KEY SUPPORT intraday then managed to close out the session above it, but the 51.95 gap from the session prior to the release of earnings still is IN PLAY from the technical breakdown in the intraday chart above. If I were coaching The Bulls, I would have them allow the 51.95 to get filled early in one of the next few sessions, pop open copious cans of spinach at the low, then rally outta there on a nice Bullish Hammer, or a Doji Star Hammer, and CLOSE the session back above KEY SUPPORT.

Unfortunately, only Ms. Market gets to call the plays. Curses!




The 51.95 gap area also is important support, basis the Ichimoku Kinko Hyo chart. The bottom of the Kumo (Cloud) currently is flat-lining, at 51.92. Notice how in the April 18 session, FCX dipped below the Kumo (Cloud), intraday, then finished the session out on a Bullish Doji Star Hammer (it only was bullish because of the upside follow-thru...those aren't always bullish). Prior to the release of earnings, FCX was poised right at the top of Kumo (Cloud), so it technically was "good to go" on any earnings that were half way decent.

So-o, that 51.92-51.95 area is next KEY SUPPORT on any further selloff. A minor intraday dip below there, ala April 18, is fine, but much more than that, especially on a closing basis, puts FCX in Bear Territory, below the Kumo (Cloud).



Gain on the FCX short trade: $1,025
Gain on the 24 FCX trades since March 23: $18,400