What Can Investors Expect from Freeport-McMoRan?




Freeport-McMoRan (FCX) closed at $9.61 on April 6, 2016. It gained 2.9% from its close the previous day. The company has been in a consolidation mode for the last few trading sessions. It hit a closing high of $10.99 on March 22. Although Freeport has lost 12.5% from its recent peak, it’s still trading more than 150% above its January lows. It has been among the biggest gainers in the mining sector this year. So far, Teck Resources (TCK) and Glencore (GLNCY) have been the other outperformers in the mining space in 2016.

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200-day moving average

Freeport has been fiddling with its 200-day moving average for the last few trading sessions. It failed to breach its 200-day moving average decisively. It closed below the 200-day moving average for three consecutive trading sessions. It’s important to note that closing below the 200-day moving average is a bearish indicator. When the stock is in an uptrend, the 200-day moving average acts as a resistance. Similarly, when the stock is in a downtrend, the 200-day moving average acts as a support.

Series overview

In this series, we’ll focus on whether Freeport is trying to consolidate after the big run up in February and March. Did it go way ahead of its fundamentals and now it’s reverting to its fair value? To answer this question, we’ll look at several aspects. The first aspect to explore would be what really drove Freeport’s recent rally. Continue reading the next part of this series to find out which factors helped Freeport’s price action in recent weeks. Then, we’ll move on to explore how these factors are currently playing out.

You can also consider the Materials Select Sector SPDR ETF (XLB) to get diversified exposure to the materials sector. Currently, metal producers form ~11% of XLB’s portfolio. Together, Freeport and Newmont Mining (NEM) form ~5.4% of XLB’s portfolio.


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