"Water shapes its course according to the nature of the ground over which it flows; the soldier works out his victory in relation to the foe whom he is facing. Therefore, just as water retains no constant shape, so in warfare there are no constant conditions."
Sun Tzu

Sunday, February 17, 2013

Why I Shorted FCX

FCX is a new short position in the Covestor Model Portfolio. I have been eyeing the stock for a while. FCX setup a "Failure Test" pattern, where price fails at major resistance.

Beginning of December, FCX acquired MMR. Investor didn't like the new diversification strategy since Freeport had always been a Copper pure play. The story might still be a burden for the stock going forward. FCX has been underperforming the broader market since the beginning of the year and the Basic Materials sector has recently shown some weakness as well, possibly due to Dollar strength.

With a current price of $35, a stop at $36 and target at $32, the trade offers a nice 1:3 risk reward ration in an overbought equity market.

FCX: a nice entry inta short postion last week.

Basic Materials acting weak recently.