Commodities play… FCX to $120?

I was wrong to recommend a sell or short on Freeport McMoran FCX just 3 to 4 weeks ago.

FCX has already soared more than 50% from a September low of $60. Will it continue rising?

Why are people including hedge fund buying FCX at $100? The answer is because they think it will go to $120.

I WILL NOT BUY IT THOUGH… but I am supporting the BULL CAMP.

I hope I wont be wrong this time to say that longing FCX here is still a good play.

Why FCX can go to $120…

- COPPER SHORTAGE
- China hungers for it now
- INDIA wants it too
- Indonesia also needs it
- GLOBAL inflation. thx to USA.
- Valuation still cheap
- Loads of CASH on hand --- increase in dividends possible or stock buyback
- Possible split in the future
- TECHNICALS show signs of consolidation and the next up move will be wild due to short covering frenzy

I will not join in the FCX fun but I am supporting the BULL camp now.

I expected the Chinese fear to break FCX but it was not that harsh, so I think FCX is still in play here.

CNBC says to buy it  at $95,…. if it goes there, they are right.

LVS short working well. Consider FCX short term short to $101

Consider shorting FCX to $101.

Do note that this is only a day trade.

The market might correct. But bulls may be back in force soon.

The lack of economic data for the next 2 days will allow the market to correct.

On wednesday, we will see whether unemployment claims have improved.

MID DAY market outlook and plays. $BAC $FCX

Guess I am too free today. I saw this chart after arriving back from school. It looks like the market has decided to start its freefall, not that free though as there are many supports along the way.

Reasons to believe that investors may flee to safety amid the mortgage mess that may derail the housing recovery (what recovery though!).

Flee to safety means back to the GREENBACK. USD will rise again. This is bad for the inflation trade.. .Out of commodities stocks now? I think we should cut some. I am cashing out all of FCX at $100 now. After a nice run up to $100.

It’s not safe to short it now. But it may be soon after the confirmation of the bearish trend.

The confirmation might take awhile. It is not confirmed just by today’s redness. The market has to drop for another 2 more days to confirm this bearish reversal. Meanwhile, I will just stay out and enjoy the ride of my PROSHORTS.

 

-- clarification regarding BAC.

I will add more positions abit lower now, given the change in situation. I will update about BAC later on.

Seriously. $FCX at new highs! Shorts were taken out by a huge surprise up move!

Look at the strong uptrend that is FCX is showing! The stock is on fire. It correlates with the dollar weakness and the copper rally.

However, I am still skeptical about this rally as the fundamentals are not supporting this climb.

While analysts might have adjusted earnings estimates higher due to the higher copper prices, the demand might be muted through the year end. US Steel has already said that orders are weakening, Alcoa said that demand will rise, and now FCX hints that demand is picking up. So who is right? Copper is demanded by anything that has to do with electricity. So if construction goes up, then copper demand goes up. I believe there should be a link between copper and steel demand. It is odd that only copper is rallying, due to the apparent shortage next year. However, this shortage has been accounted for by the CHinese government who has already stocked up more than 300k tons of copper.

I think buying some FCX DEC PUTS $90 is the safest trade here. This is to trade the downside risk that FCX has now.

Freeport Mcmoran BREAKOUT! but remain short. $FCX

 

FCX had a huge run. I called for a short at $80 but the stock proved too bullish. I closed out my short at that point. Now the stock is up $9 from my closed position. I have entered short again, a little at $88.10 (previous resistance) and a little at the end of day $89.13

There are many reasons as to why FCX is overly hyped.

Reason 1: Copper demand is not that real. The latest inventories drop were due to restocking by China in anticipation of greater demand.

Reason 2: Copper is a highly volatile commodity. Today it has reached a 2 year high. And of course the metal cant just continue running higher. A 6% drop in the metal price equates to $3.40/pound. That is how unstable this commodity is.

Reason 3: USD has dropped so much as Tepper traders think quantitative easing. As the yield keeps going higher, soon, investors might run back to safety again especially when the economy is still not doing well.

Reason 4: Technical reason: This alone I trade on --- RSI divergence. FCX just made a new high, the RSI however is so high. The sign shows that FCX is extremely overbought as investors flock to FCX as an inflation hedge.

Reason 5: ISM Prices shot up so much. There is definitely severe inflation already, just not seen within the consumer side. However, the decreasing dollar makes commodity so expensive that manufacturing cannot progress faster than what we want it to be or the Feds.

I am thinking of the BIG SHORT of FCX just like how I shorted SNDK from $50 until it dropped below $40. This time, it’s different, I am not shorting FCX down the drain, but just a little, to its corrective trend line.

See the chart, it rules trading.

Good luck traders. Remember, just use a very very small amount if you consider to enter this trade.

Copper starts to reverse on profit taking or even more? FCX shows a reversal pattern at a really strong resistance line.

It’s about time that FCX starts to correct from a nice 30% rally since early september. There are 2 gaps ($79 and $72) that have not been filled. The $72 will most probably remain as a gap unless economic conditions worsen.

The dollar may start to rally again as investors flee to safety amid the earnings seasons. With financials hinting that the rally has no more steam. Tonight, we await China’s PMI to confirm this commodity rally. Any poor figure may result in a crazy selloff on FCX, X, AA, CLF. Any good figure would most probably support this recent rally.

Look at the FCX chart. THere seems to be extremely good support at $76. Should FCX dip to that level, it is a screaming buy. Investors looking to trade copper long term should buy FCX at that level. At current prices, FCX seems to be overvalued, given the resistance level that must most probably be respected. Today’s selloff volume shows that more declines will most probably happen.

FCX has a knack of dropping continuously for the first 10 trading days of October. Look back at its history. Nevertheless, FCX will become a good buy at $76. I am doubtful to buy FCX at current prices. It was too high at $84, and it is too high now.

Tradeoff. Wait and get better prices.

The Market is in denial and euphoria. Continue to short $FCX and $LVS.

Looking at the market psychology chart again, Refresh your memory here, http://tradedragonschool.blogspot.com/2010/09/market-psychology-cycle.html. it seems that the market is in both denial and euphoria mode again.

By denial, I mean that the market will go up in the mid term, and by euphoria, I mean that the market will go down in the short term.

Today’s price action is surely breath taking. 2.17, there was a FLASH PUMP! The DOW suddenly jumped 70 points. That was during my economics lecture. I was dumbfounded… WT$? The market has been behaving rather erratically lately. Stocks jumped as soon as the FED said that they may provide more relief to the economy. Well, that is a good and bad news. The latter being that the economy is doing good.

So, finally, the Bulls gave up, and the shorters started shorting the hell out of this market.

It looks like we may see more bearishness ahead. Housing sales figures will freshen the tone, and perhaps the unemployment figures may also help to keep this rally sustainable. Otherwise, the market will crumble one more time.

Trading ideas====

http://tradedragonschool.blogspot.com/2010/09/bearish-hanging-man.html THE BEARISH HANGING MAN – FCX has that.

This candlestick signals more downside for FCX. This confirmed that the previous rally that FCX had was due to GOLDMAN’s PUMP. The Dump begins shortly.

LVS short confirmed.

Support is seen at $30.4.

Take profits on your SNDK shorts. It’s time to run before Apple release some surprise devices that will use NAND.

Freeport Mcmoran – FCX technical.

FCX got out of the bearish technical territory.

However, there is no reason to buy FCX. Today’s technical breakdown was due to Goldman Sach pumping action.

Thanks to Goldman Sachs, more longs could cash out their FCX holding. A few have gone into shorting mode.

I am maintaining a bearish stance on FCX as it is overbought, in the long term though, FCX is a great stock to own.

The trade is to buy FCX at $76 or short FCX for the traders who love to profit from ppl’s EUPHORIA and fear.

FCX will trade together with the volatility of Copper which somehow hit a super high.

Copper is now at a resistance level and it may lose some weight this week if economic conditions continue to fail expectations.

This the real time chart of Copper. (hit refresh to refresh the price)

Finally the technical side of FCX. It is a volatile stock. Look at last year’s october chart, FCX could correct very strongly.

FCX is in a long risk zone. It is dangerous to buy fcx at high prices. There is now limited upside. Traders may start to short this stock.

ideas from CNBC.

First thing to note about CNBC.

- BUY HIGH, SELL LOW.

So recently, CNBC has become quite neutral. Offering advices to buy and sell the market. In this case, there is reason to believe that a short term correction is inevitable. This is because, even CNBC- the biggest momentum trader news network is indecisive. Bulls have lost momentum already.

Here are CNBC fast money recommendation.

FCX, FEDEX> SELL THEM ALL.

And finally, the most important person to note in CNBC – DOUG KASS.

Do remember the previous 2 times when I said Doug Kass would always be right, and he was. He has already predicted 3 bottoms now.

Now he is predicting a peak, Kass is shorting the market at this level.

Guess I will listen to Kass among all CNBC’s contributors.

 

On the bullish side, Art Hogan believes that stocks will breakout to the upside as funds are flowing money into US stocks.

While this is true, I believe that funds are smarter to buy stocks at a cheaper price, not at this current price. This supports the view of a long term bullish trend.

These are ideas from CNBC. The PUMP AND DUMP network.

China Industrial Production boosted the markets. Short FCX and LVS.

While the china numbers were surely good, the euphoria in the trading floor simmered down as there are still many bears in the market.

The DOW jumped almost 100 points, failing to close above its resistance level 10550.

I am still wary of the Option Expiration day, as the option pain numbers are just too low. Hedgefunds who want to protect their calls and puts premiums will be manipulating this market.

Continue to remain bearish for the short term. Remained short on LVS. Whoever that is commenting can do the opposite. Read my opinion at your own risk. Appreciate any helpful comments.

Short FCX again at this resistance level.

Happy Trading.

OBAMA victory=Market Rally? Short FCX.

This morning, the market’s bearish sentiment seemed to fade after Obama’s victory to sign that small business bill. But is this rally going to hold?

I am going to post my daytrading chart for the first time. I use the Dow Jones Industrials 5 min chart to determine whether the rally is going to hold.

Today’s action shows that bulls and bears are fighting each other. We saw in the early morning, bulls were trying to make the shorters cover their positions, and they succeeded to bring the market up to 10450. Then bears took over again, and then bulls took it again. Now the market is at 10450 again. Bears will definitely try once more.

Notice the higher volume at that point, there is definitely strong resistance there. And will this job bill be able to break it? Honestly, with charts alone, we wouldn’t know. However, we can turn to metal prices to see the macro market.

Metal prices are heading down. Aluminum is most probably being shorted to its support level at 90cts.

So I am guessing that the broader market, will also sink from here.

Short FCX again, $79.2.

Freeport Mcmoran FCX is a short almost now.

FCX is currently overbought. The stock has risen greatly and it is reaching major resistance. No doubt the stock has been a favorite by wall street as seen by its strength.

However, I think the resistance will be too strong to be easily broken by FCX. I am shorting FCX for a quick trade to $75.

Fundamentally sound, but this sector is shaky due to the uncertainty of the double dip. The stock may rocket upwards if the market is convinced that a double dip is 0%.