Mining and commodity stocks reflecting bullish momentum

FCX - weekly chart
FCX – weekly chart

With the CRB index now rebasing and base commodities starting to recover, mining and mining related stocks are now also reflecting the general uptrend, with four in particular now looking increasingly bullish on the longer term timeframe.

Starting with Freeport McMoran (FCX) and the weekly chart, the initial stopping volume for the stock appeared initially in late January with the wide spread down candle associated with ultra high volume, and a degree of buying evidenced with the wick to the underside of the candle. The stock then continued lower to test the $16.20 level before duly building a platform of support in this region. However, the initial rally in February was weak, with the stock price rising on falling volume and narrowing price spreads,  evidence the bearish sentiment had not been fully absorbed. This in turn resulted in a second phase of ‘mopping up’ with the candle of late March then sending a clear and unequivocal signal of buying on very high volume and a narrow spread, and duly reinforced with a pivot low. The platform of support at $18 then held with last week’s price action closing with a wide spread up candle on rising volume and confirming the bullish sentiment for the stock. The next resistance level now awaits at $24 and should this be breached then the stock price should continue to rise further, with a solid platform of support now in place, with the next logical target now the resistance in place at $29.50, so some way to go yet.

Rio Tinto - weekly chart
Rio Tinto – weekly chart

Rio Tinto (RIO) also reflects the broad trend for commodities, re-basing in the $40.50 region over the last few months and now preparing to attack the resistance region in the $46.50 area. This is a region that has been tested twice in April, with last week’s price action the most recent, before closing at $45.87 ahead of the market open today. The deep wick to the underside of the candle suggests further buying of the stock, and provided we see a close above the $47 area this week, then the stock is likely to rise further and on towards the psychological $50 price level in due course.

BHP - weekly chart
BHP – weekly chart

BHP Billiton (BHP) too is now preparing to breakout, having built a strong platform of support in the $44 per share price region, and moving firmly higher over the last three weeks to close on Friday at $51.92 on good volume. With little ahead in the way of price congestion or resistance a run towards $56 now seems increasingly likely, and provided the stock price moves firmly through the $52.50 region, then the current bullish tone should continue in the longer term.

COSWF - weekly chart
COSWF – weekly chart

Finally to more speculative stock and Canadian Oil Sands Ltd (COSWF) and one quoted on the Toronto Stock Exchange (TSE). Certainly a more volatile stock and one which is highly speculative, but from a technical perspective an interesting chart. Alternative energy sources have certainly hit the headlines in the last few months, with oil prices falling dramatically as the squeeze on the alternative energy providers taking its toll, but with the US increasing production, and with oil prices now rising once again the weekly chart looks interesting, with the share price having based around $6.50 and holding above the $9.90 region. With little resistance now ahead, $14 looks an achievable target, and provided volumes continue to rise in line with prices, this may follow the general trend for commodities higher and yield some nice returns in due course.

By Anna Coulling

Charts are from NinjaTrader and the trading indicators from Quantum Trading.

About Anna 1011 Articles
Hi – my name is Anna Coulling and I am a full time currency, commodities and equities trader. I have been involved in both trading and investing for over fifteen years and have traded many different financial instruments, from options and futures to stocks and commodities. I write and publish articles ( mostly for free ) for UK and international publications on a wide variety of financial issues, and in particular I enjoy helping others learn how to invest and trade.

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