Freeport-McMoRan Unexpected Q2 Results

Freeport-McMoRan (FCX) has just reported its second-quarter results, which are very interesting to see in the light of ongoing problems in Indonesia and the recent upside in the copper market. The company reported adjusted net income of $0.17 per share on revenue of $3.7 billion, missing analyst estimates on earnings and beating them on revenue.

More importantly, the company revised its full-year production guidance. Previously, Freeport-McMoRan expected to mine 3.9 billion pounds of copper, 1.9 million ounces of gold and 93 million pounds of molybdenum. The revised version of this guidance calls for 3.7 billion pounds of copper, 1.6 million ounces of gold and 93 million pounds of molybdenum.

The hit on copper and gold production is due to ongoing tensions on Grasberg and cannot be called unexpected. Following the decrease of the production guidance, Freeport-McMoRan lowered its full-year operating cash flow guidance from the previous estimate of $4 billion to $3.8 billion. The impact from lower expected copper and gold production was mitigated by the increase in projected copper sales price.

Technical Analysis

Overall, the bias in prices is: Upwards.

Short term: Prices are moving.

Intermediate term: Prices are trending.

Note: this chart shows extraordinary price action to the upside.

By the way, prices are vulnerable to a correction towards 12.82.

The projected upper bound is: 16.17.

The projected lower bound is: 14.09.

The projected closing price is: 15.13.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 24 white candles and 26 black candles for a net of 2 black candles.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 88.7476. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 6 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 81.93. This is where it usually tops. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 92 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 245.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 3 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 20 period(s) ago.

Rex Takasugi – TD Profile

FREEPORTMCMORAN closed up 0.190 at 15.060. Volume was 60% above average (neutral) and Bollinger Bands were 106% wider than normal.

Open High Low Close Volume
14.760 15.265 14.415 15.060 8,186,675

Technical Outlook
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 13.31 12.11 13.14
Volatility: 77 51 53
Volume: 5,773,982 4,819,480 6,263,854

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

FREEPORTMCMORAN is currently 14.6% above its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect moderate flows of volume into FCX.N (mildly bullish). Our trend forecasting oscillators are currently bullish on FCX.N and have had this outlook for the last 34 periods. Our momentum oscillator is currently indicating that FCX.N is currently in an overbought condition.

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