FCX Earnings: "Ye Olde Knuckle-Biter"

As readers know, the only thing that I care about on the earnings, or about anything else to do with the fundamentals, like analyst upgrades/downgrades, is the market's RESPONSE to them. Knowing the particulars isn't going to help me to make a trading decision.

The general consensus seemed to be that the earnings were "good." Some folks thought "very good." Knowing that doesn't help me to make a play. Looking at a chart does.

Knowing that we've had an upside technical breakout of the 2011 Falling Wedge, I was looking this morning for an opportunity to get long the stock if I thought that I had an entry that seemed reasonable. When FCX sold off on the "good news," that looked to me like profit-taking after the roughly 20% run-up that the stock has enjoyed, prior to earnings, during which time seven pattern targets in the daily chart have gotten MADE (more in the intraday charts).

"Buy the rumor of good earnings...sell the actual release of earnings."

Again, given that the recent technical breakout in the stock was bullish, where would it seem "likely" that FCX would get a bounce, after the early selloff, if it were going to get a bounce at all? The unfilled gap at 55.12 looked like a strong possibility for a bounce, so I placed an order to buy 2,500 shares at 55.15, slightly above the gap, in case it didn't get filled entirely. It didn't. The initial morning low was 55.21, just above my order, then FCX took off and rallied $1.48, to 56.68.

"The best laid plans of mice and men." CURSES!!!

After that rally, Ms. Market gave me another chance to have the stock at my order of 55.15, but I wasn't sure that I wanted it after seeing the stock sell off that much, from the 56.68 high. "Be careful what you wish for." It still was early in the session, though, so I went ahead and took the trade, but I wasn't interested in any nonsense, like seeing stock go very much below that 55.12 gap.

After filling the 55.12 gap, FCX continued to sell off, down to 54.77. UGH. That wasn't what I was "wishing for" at all. My expectation in the trade was for the 55.12 gap to get filled, then for the stock to rally smartly off that gap fill if the RESPONSE to the "good news" on earnings really was something "good." My plan wasn't going well at all, with the stock about eighty cents below the top of the 2011 Falling Wedge, so my trading plan became "Get outta the trade with the best gain that you think you can get, based on what you're seeing in the chart. Stop it out for a loss below 54.77."





What I was seeing in the chart was horizontal resistance at about 55.50 and the inverted, declining Exponential Moving Averages (Fibonacci 13, 21 and 34) up at the same area, the highest of which (the 34) was around 55.47. Given how unacceptably (to me) FCX was performing on "good news," I shaved my expections a bit and threw the trade in at 55.42, below 55.47-55.50 resistance. The afternoon highs after that were 55.55 and 55.51, so I "coulda" squeezed a little more out of the trade, but I was being mindful of what Ms. Market taught me on Wednesday about being greedy. I also "coulda" made a play for the top of the 2011 Falling Wedge, at 55.679, but I wouldn't have gotten it. LOL.



The final RESPONSE on the session to the release of earnings was a CLOSE back below the 2011 Falling Wedge, so The Bulls have a "Knuckle-Biter" on their hands, and the upside pattern targets go ON HOLD unless/until the stock can break out again above the top trendline. I don't make predictions about whether or not it will or it won't, or predictions about anything else, for that matter. I just try to play the market as best I can, and yesterday, the best that I could do was to throw the trade in on a "vote of no confidence" that the stock would be able to manage a CLOSE back above the breakout. It didn't.

"It ain't over 'til it's over." Tomorrow is another day...



Gain: $650