Wednesday, 3 May 2017

FCX, TECK - miners pressured by copper

Whilst the main market settled a little weak, there was significant weakness in the copper miners. Freeport McMoRan (FCX) and Teck Resources (TECK) settled lower by -5.5% and -5.7% respectively. Near term outlook is a little shaky, as copper is still firmly stuck within the $2.70/2.40s. Mid term outlook resumes bullish with copper >$2.70.

FCX, daily

TECK, daily


*first, an update on copper, weekly

Suffice to add... copper saw $2.69 on Monday, and since then... its been a full reversal. Arguably, things only turn bearish if <$2.45. In theory, commodity/copper bulls could tolerate the $2.30s - above the Nov'2016 breakout.

As for FCX and TECK...

Freeport is especially struggling, as it has yet to fully reach an agreement with the Indonesian govt. That has been a dark cloud over the stock since late last year. Things only turn bullish with a break into the low $13s... back above the 50/200dma's. The grander target is $20.00, but that will require a secondary bullish breakout in copper >$3.00.

Teck Resources is fairing much better, and is still trading close to a very extended consolidation phase. Keep in mind, TECK hyper ramped from a Jan'2016 low of $2.55 to a Nov'2016 high of $26.56. Seen on a bigger weekly/monthly chart, price structure could be argued is a bull flag/pennant. First upside target would be the $34/35 zone.

On balance, TECK is the stronger stock, although I'd imagine FCX would rapidly catchup once the Indonesian situation is conclusively resolved.