Despite copper prices hitting a low on Thursday, August 8th, Michael Ballanger of GGM Advisory Inc. remains bullish on Freeport-McMoRan Inc. (FCX). He believes the recent pullback in copper prices presents an opportunity to capitalize on a potential short-term rally.
Ballanger argues that although copper is currently in a bear market rally, the MACD and MFI indicators are suggesting a positive shift. The MFI is recovering from a deeply oversold position, indicating a strong rebound. Additionally, FCX is emerging from an oversold RSI reading, which typically signals an upcoming turn. These technical indicators, along with the potential for copper to rise another $0.40/lb., make FCX an attractive investment.
Ballanger recommends buying FCX November $40 call options, as he believes these offer better leverage than the November $45 calls. He suggests aiming for a retest of the 50-dma and 100-dma levels, which would push the $40 call options to between $7.27 and $8.70.
He also emphasizes the importance of FCX’s gold production through its ownership of the Grasberg Mine in Indonesia. The recent rise in gold prices, exceeding $2,500, provides further support for FCX’s bullish outlook.
Ballanger believes FCX is poised to benefit from a combination of factors: a potential short-term copper rally, a long-term bull market in gold, and positive technical indicators. He recommends a strategy of buying FCX November $40 call options, aiming for a retest of the 50-dma and 100-dma levels.
In his GGMS 2024 Trading Account, Ballanger recommends adding 50 contracts of FCX November $40 call options at a price of $4.70. He believes this position offers significant upside potential and is a strategic move within a broader bullish outlook on copper and gold.
