OUR "BELL COW" OF MINING HAS FAILED ITS TEST by Brian Hunt
Freeport has failed.
Two weeks ago, we featured a chart of Freeport-McMoRan (FCX), one of the "bell cows" of the natural resource business. When fund managers want exposure to mining and metals, FCX is a "go to" stock.
FCX was a huge winner from mid-2005 to mid-2008. Copper and gold – its two main products – were soaring. Plus, everyone wanted to own mining stocks. Nowadays, the opposite is true. By early November, FCX had declined 81% from its 2008 high to its October low around $25 a share. We called this low a "make or break" level for mining stocks. If FCX remained above it, great news for mining. If FCX broke it, bad news for mining.
Now here's the bad news: FCX breezed through the "make or break" level to close at $21.68 on Tuesday. Folks still can't stand the thought of owning a mining stock. Until Freeport starts "behaving" and climbs above $25 per share, expect more misery for miners.