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Why It’s a Battle between Freeport-McMoRan Bulls and Bears

Mark O'Hara

What's in Store for Freeport: A Technical and Fundamental Overview

Freeport-McMoRan bears

Freeport-McMoRan (FCX) closed at $11.08 on May 20, gaining 0.91% from its previous day’s closing. The stock has lost ~20% so far in May. Freeport and other copper producers have seen a change of fortunes over the past couple of months. At the beginning of the year, not many expected that Freeport would trade above the $10 price level. However, Freeport has been defying all pessimism in the commodity space and moved to higher price levels.

Roller coaster year

It has been a roller coaster year for miners like Teck Resources (TCK) as the graph above shows. Bulls (UPRO) and bears (SPXS) have been involved in a battle of sorts to wrest control over Freeport. The year started on a weak note and commodity companies fell to multiyear lows in January. However, subsequently, bulls took over and we saw decent upward price action between February and April as concerns over China’s slowdown eased. Now May is turning out to be a rough month for miners like Rio Tinto (RIO) and BHP Billiton (BHP), as concerns over the health of world’s second-largest economy have resurfaced.

Series overview

The recent correction has put the spotlight back on Freeport. Markets seem to realize that the commodity cycle has not yet fully turned around. In this series, we’ll do a fundamental and technical analysis of Freeport. This should help us understand whether the recent pullback is an opportunity or whether more pain lies ahead for Freeport. We’ll also look at the key risks and opportunities that Freeport faces.

We’ll begin by analyzing analyst recommendations and target prices for Freeport in the next part of this series.

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