Minyan Mailbag: A Quick Trip Through Dodge City
No one makes me bleed my own blood
Editor's Note: Our goal in Minyanville is to remove intimidation from the financial markets and encourage an interacrtive dialogue among the Minyanship. We share this next discussion with that very intent.
Woke up this morning, looked at the Phelps Dodge (PD) chart and noticed it stopped at 93.99(999??).
Is everyone looking at the same chart you're looking at?
Now the million dollar question: roll over, bust through/roll over, or revisit the highs?
The PD trend line that was broken in April dates back to the October 2002 lows. It's not uncommon for a stock that violates such an important trendline to revisit the breakdown point, and that's what PD appears to be doing now.
I see the better than 3% move so far today, but I also would note front month copper remains on a sell signal that was given a couple of days ago. PD does not have to follow copper, mind you; stocks tend to act like stocks, not necessarily commodities, and this is true even when the business of the company is deeply connected. When a move in a commodity-related stock looks corrective, and this one still does, I find it helpful to take a peek at the related commodity to get a feel for the context there as well.
As for the million dollar question, I wish I knew the answer - then it really would be a million dollar question! Instead, all I can tell you is that when I factor together all the evidence at hand, the probabilities favor at best a final push through that key resistance, toward 96, and then a roll-over, rather than a revisit of the old highs.
Phelps Dodge (PD) 2x3 scale
Courtesy of Dorsey, Wright & Associates.
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