Did This Earnings Report Create A Big Opportunity?

Yesterday this company announced its earnings and had a strong move up through its 200-day moving average.

The stock is also rallying from a well-defined double bottom pattern.

This combination creates a potentially bullish set up for a multi-month rally.

Read below to see how to trade it.

As you can see in the chart below, Freeport MacMoRan Inc. (FCX), has a big double bottom, and just broke the 200-day moving average.

The earnings report that fueled the break did create a strong day, but the key to a break of any resistance is how it follows through.

For this reason, the most bullish scenario is one in which FCX trades over $12.10.

However, FCX is more than just a break of the 200-day average.

FCX is also breaking over a swing high and a well-defined consolidation level of $11.50 to $11.75.

This consolidation level should provide support for the pullback FCX is experiencing today. Since the market is also pulling back it is hard to tell if FCX is weak or just following the market.

As I often do, I’ll lay out two trades.

The first trade it to buy FCX if it rallies back over $11.80 and then place a stop under $11.30. I suggest waiting for the rally over $11.80 because that is support which should have held, and now will be resistance.

The second trade is to wait for a confirmation of yesterday’s breakout, and buy a move over $12.10. In this case, the stop should be under either $11.75 or $11.50, depending on how much you prefer to risk. $11.50 would be more reliable. 

Trade smart,

Rick Nartarian, Chief Investment Officer
The American Investor Daily