GDX: Broken Support - FCX: New 2011 Low

From yesterday, on the GDX:

"" The Bulls scored an upset victory in yesterday's session by taking out that resistance, and a target of 68.15 is IN PLAY
as long as the GDX trades above that 64.75 - 65.76 neckline.
The Bears are caught out of position unless/until they can crack it."

Players were well aware of that neckline in yesterday's trading. The GDX went down hard to test it, bounced off 65.73 very quickly and pounded higher. It happened so quickly, I wasn't fast enough to catch it.

That bounce off 65.73 was a double validation of support. Not only was the neckline breakout retested and validated, the bottom of the Rising Channel in the daily chart, which came in yesterday at 64.735, was validated within a half a penny!

That was a big score for The Bulls and the GDX rallied hard off it, but unfortunately for The Bulls...



...the ensuing rally got hung up at the bearishly inverted EMA's (white down arrow), and failed. The Bears took over from there and were able to send the GDX down through double validated support on a CLOSING basis. Oops!



It's been back and forth all week for control. At the gong, it was The Bulls who were caught out of position. Advantage: The Bears.



FCX continued down in the early going, off Tuesday afternoon's morphed H&S Top breakdown (see yesterday's chart). The Bulls initially attempted to form and break out of a Falling Channel/Bull Flag (in white), but it was no good and the stock went lower.

The Bulls regrouped and tried that same maneuver again, and the second time, they were successful (pattern in yellow). They broke out of it to the upside (first yellow arrow), then got sent back for a retest of the breakout. I liked the Bulls' chances on the retest and bought 5,000 shares of FCX at 36.49. The breakout put a target of 36.96 IN PLAY.

36.65 - High of the pattern
36.11 - Low of the pattern

36.65 - 36.11 = 0.54 points of upside on the breakout above 36.42

36.42 + 0.54 = Target: 36.96



While that were at it, The Bulls decided to indulge their morning penchant for channels and formed and broke out of another one (in orange). Lovely. Nested patterns and multiple patterns have a better chance of being successful when they break out, or break down. This breakout put a target of 36.89 IN PLAY, reinforcing the initial target of 36.96, just above that.

36.71 - High of the pattern
36.33 - Low of the pattern

36.71 - 36.33 = 0.38 points of upside on a breakout above 36.51.

36.51 + 0.38 = Target: 36.89 IN PLAY

When looking at these patterns from the microscopic vantage point of this 1-Minute chart, it's a good idea to check the 5-Minute chart to see if there's anything obvious that would millitate against the targets getting MADE. We already know that the longer-term time-frames in FCX are very bearish, so we want to be especially cautious being long a stock against the dominant trend.



Horizontal resistance from the last high (horizontal red line) was 37.23. The highest of the bearishly inverted EMAs, the 34 EMA, was at 37.07. Both of those were above the 36.89 and 36.96 targets that were IN PLAY, so FCX had some "head room" to rally, although it would be a foot race with those EMAs coming down. We shouldn't want to see The Bulls tarry.



The Bulls got it done and I sold my 5,000 shares when the 36.96 target got MADE.

Er-r-r...at least I thought that I did. I failed to notice until a bit later when I was recording the trade that the confirmation said BUY 5,000 shares at 36.96.



I checked the execution sheet. Yep. I was long 10,000 shares of FCX. My eye sight is worse than I thought.

Market lesson: "Don't get old." LOL.

Fortunately, Ms. Market was kind to an old man. When I caught my error, FCX was trading at the top of The Rectangle (in blue) in the next chart. I was able to sell the 10,000 shares at 36.99 and 37.00. Whew!

I will admit that I was tempted to hold some back for The Rectangle target in the 37.20's, which ultimately did get MADE, but decided not to press my luck at that point since I was darned lucky that I caught the mistake before I got into trouble.



After The Rectangle target got MADE, FCX went a little higher, to 37.41, then returned to its recent bearish behavior. It traded sideways-to-down, then formed and broke down from a wide-swinging Symmetrical Triangle (pattern in green), and closed a few pennies above a new low for 2011.



Gain on the session: $2,650