This Miner’s Stock Will Keep Digging the Hole Deeper

by Sam Collins | August 22, 2013 1:31 am

Freeport-McMoRan Copper & Gold (FCX[1]) — This mineral resource miner has assets in Indonesia, North and South America, and Africa. It is the second largest copper producer in the world and a major producer of gold. But its merger with Plains Exploration & Production Company and McMoRan Exploration Co. is considered a negative, and analysts estimate that it will result in a reduction of the company’s value as a copper producer.

Copper and gold prices have been in a downtrend, reducing the revenue contribution of FCX’s major product. S&P estimates 2013 earnings will be $2.82 per share versus $3.19 in 2012.

The stock is in a bear market, having executed a death cross in December, and it has consistently failed to close above its 200-day moving averages on five rally attempts since then. The most recent failure is about to be accompanied by a strong sell signal from MACD.

If you own FCX, sell some now at the current price and sell more into possible rallies since the long-term trend is down. A break through its 50-day moving average at $29 could cause it to fall to the mid-to-low $20s.

FCX Chart
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