Freeport Breaks Out

Published on Thursday, 19 January 2012 16:17 Written by David Becker

New York, January 19^th (TradersHuddle.com) - Strong US economic data, along with the demand for industrial metals, has pushed Freeport-McMoran (NYSE: FCX) above resistance levels, and has set the table for further upside momentum.  Thursday's better than expected jobless claims, which is the lowest level since April 2008, has assisted the broader markets along with FCX.  The company released its fourth-quarter earnings Thursday.  Profits fell to $640 million, or 67 cents a share, from $1.5 billion, or $1.63 a share, in the year-ago period. Revenue dropped to $4.16 billion, from $5.6 billion. Analysts expected the company to earn 61 cents a share on revenue of $3.85 billion

During the majority of the 4th quarter FCX remained in a $7 dollar range, hovering around the 50-day moving average near 38.50.  The stock has seen a robust run up in share price during January, leaping nearly 16%, slicing through resistance near the 200-day moving average near 44.50.  The next level of target resistance is seen near the highs made in August prior to the summer swoon near 47.50.  Support on the stock is now seen near the 20-day moving average at 39.20.  The stock has been supported by the 5-day moving average, which has held throughout January.

The Relative Strength Index (RSI), has now moved above the 70 level, which many would consider to be in the overbought region.  FCX has not seen an RSI above this level during the past 52 weeks.  The stock continues to hug the upper end of the Bollinger band that is 2-standard deviations from the 20-day moving average.  Although this level could be considered overbought, when Bollinger bands widen from a narrow base, it usually confirms an upside breakout.

The MACD, moving average convergence/divergence indicator is showing a positive index level of .75, with both the 12-day moving average/ 26 day moving average spread and the 9-day moving average of the spread pointing higher.  The MACD cross came in early January which was the buy signal.