Market Curiosity: Exploring Markets And Systems

September 14, 2012

FCX (copper): looking to go long due to favorable COT (update 4, Oct 21)

Filed under: +Over +101%, Long Calls, Short Puts — Tags: , — Jeff Fitzmyers @ 11:50 am

September 1, 2012
A blurb and background (with a great chart!) from Brett Eversole

The big news sources enjoyed reporting that China’s copper imports fell 17.5% between May and June. What they didn’t tell you is that June imports were up 24% over the previous year. And July imports were up again.

Because “large traders” are near historic short levels, Mr. Eversole suggests that FCX could rise over 100% in the next 14 months.

FCX trades for Monday:
Long NOV 35 calls for about $285. (A normal strategy.)
Short SEP 34 puts for about $40. (Due to commercial buying, downside is likely limited.)
Long Jan 2012 2014 45 calls for about $275. (If the “target” price and time is 60 in a year, 45 is half way between 30 and 60. I usually vastly favor trend following over “targets”, but this is very defined. Let’s see what happens.)

+ Solid up volume days in the past 2 months with declining down volume.
+ RSI’s are fine.
+ Broke and tested the near term down trend line. Next trend line hurdle is associated with the January 2011 top.
– Missed the low risk entry on Friday.
– The seasonals and historic cycles are unclear to me.

Notice FCX has had 2 dips toward the down trend line. HG has only had one. Supposedly the stock leading the commodity is bullish for both.

Related:
+ Update on acquiring nickels. Currently worth 7.27 cents (Now 4.8 cents) Seriously, who could not be saving nickels??? KISS!
+ Waiting for a bounce setup in copper near 3.23.

Update 1, September 4: Xiphos Trading’s copper chart

Long NOV 35 calls for about $255.
Short SEP 34 puts for $50.
Long Jan 2014 45 calls for about $260.

Update 2, September 7: Peter L Brandt Copper has a history with the compound fulcrum pattern

Long NOV 35 calls for about $255. Now $505.
Short SEP 34 puts for $50. Now $5.
Long Jan 2014 45 calls for about $260. Now $385.

Update 3, September 8: Trend lines matter.

Update 4, September 14: Taking partial profit
Long NOV 35 calls for about $255. Now $810. +217%.
Short SEP 34 puts for $50. Now $1. Doing nothing.
Long Jan 2014 45 calls for about $260. Now $560. +115%.

Update 4, October 21: Trade still preforming well.
Long NOV 35 calls for about $255. Now $630.
Short SEP 34 puts for $50. Expired worthless. +100%
Long Jan 2014 45 calls for about $260. Now $440.

Update September 20 2013
I lost track of things 🙂

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