Freeport-McMoRan Inc (NYSE:FCX) has ripped higher from a low of $3.50 on January 20th, 2016 to a high today of $14.04. This is a mega run of 300%. While huge, the run itself does not dictate a pull back. Instead, smart investors need to look at the chart and find technical levels for a drop.
In the chart below these technical reasons show perfectly. Notice the stock hit a major pivot top from October 2015 as well as a secondary upsloping trend line connecting the lows from August & September 2015. The fact that two major trend lines intersect right where price hit, tells us there is a 90% chance of a sharp correction in the $FCX price action. A pull back is likely to take you down to $11.00.
The S&P 500 has been a wrecking ball, blasting through resistance after resistance over the last two months. In all, the markets are up 15% from their lows in February. A level is now being hit by the $SPY that is more major than many of the last resistance points.
If you connect the highs stretching back to the all-time high on the $SPY from May 2015, it creates a perfect trend line which is now being tagged. Note the chart below. Will this be a level for a pull back? Ultimately, in normal market conditions it would be an epic pull back. However, with the Federal Reserve continuing to wave the white flag and volume remaining near the lowest levels in a decade, it is not as easy to call as usual. Ultimately, as chartists we have to trust the chart and believe a pull back is near.
The $SPY is quickly approaching a trend line shown in the chart below. Notice how it connects through all the highs extending back to the all-time high on the $SPY in May 2015. In other words, the markets are testing a level/trend line that began almost a year ago. [more]
The Market Vectors Gold Miners ETF (NYSEARCA:GDX) has soared in the last few months. The ETF traded as low as $12.40 in January 2016 only to climb to a high today of $23.06. This is a whopping 86% in less than 3 months. While many investors are jumping on board the gold miners there is a dead-on signal they are a short here.
It is one of the simplest chart comparisons out there. All you need to do is compare the SPDR Gold Trust (ETF) (NYSEARCA:GLD) to the $GDX chart. You will clearly see that recently gold ($GLD) has not taken out the recent highs while $GDX has soared to new highs. What does this mean? It means that the gold miners ($GDX) are being squeezed. In other words, a lot of the upside is short covering. Short covering will not last. In fact, a possible doji today on the daily chart of $GDX may spell the top. Note the charts below to understand fully. However, the bottom line is that the $GDX will likely pull back below $20 in the coming weeks. That is an over 10% drop.
Apple Inc. (NASDAQ:AAPL) slammed into its daily 200 moving average today. The stock has jumped from $92.65 to a high today of $112.19. That is a gain of 21% in approximately six weeks. [more]