Has the Correction in Freeport-McMoRan Run Its Course?

In this daily bar chart of FCX, below, we can see that trading volume was higher than average in June and July and could represent a shift in ownership from weaker hands to stronger hands. A 50% price adjustment can attract longer-term investors. The slope of the 200-day moving average line is negative and the 50-day line is also bearish. FCX rallied above the 50-day line in August but has slipped back below it recently.

The On-Balance-Volume (OBV) line declined to a low in early July and so far that low has not been broken. The Moving Average Convergence Divergence (MACD) oscillator briefly moved above the zero line in August but has turned back below it. 

 

In this weekly Japanese candlestick chart of FCX, below, we can see a bottom reversal pattern in early July to mark a price low. Prices trade below the declining 40-week moving average line. The weekly OBV line shows some stability (aka sideways movement) from July. The MACD oscillator is close to a cover shorts buy signal. 

In this daily Point and Figure chart of FCX, below, we can see a potential upside price target in the $49 area. 

 

In this weekly Point and Figure chart of FCX, below, we can see a downside price target in the $17 area but a trade at $34 should improve the picture. 

Bottom line strategy: Many, many market analysts are watching the direction of copper futures for clues about the strength of the economy and the direction of the inflation figures. I have learned over the years that forward-looking investors will buy share prices before the physical commodity because timing does not have to be perfect (no one likes a margin call). 

Based on the charts and indicators of FCX, I would look for prices to improve in the months ahead as demand has slowed but supply has not increased. Probe the long side of FCX risking to $23 for now.