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华尔街日报Stock Of The Day – Is Freeport-McMoRan About To Sell-off?
Shares of Freeport-McMoRan Inc. (NYSE:FCX) are trading lower Monday. They have stalled at the resistance around the $53 level.
Some old Wall Street sayings are based on market dynamics. Two of them may be relevant here. This is why Freeport is our Stock of the Day.
The first saying is ‘sell at former tops.'
As you can see on the chart, the stock found a top around $53 in March 2022. After reversing and selling off, it returned to this level in May 2024. Once again it reversed and headed lower. This would have been a good time to sell.
Investor and trader psychology can create resistance at former tops.
This happens when some of the people who bought shares close to a peak or top regret doing so if the price drops after. Many of them decide to hold on to their losing positions, but they also decide to sell if they can eventually get out at breakeven.
As a result, when the stock rallies back to the buy price, they place sell orders. If there is a large number of these orders, it can form resistance at the same price that had previously been a peak.
‘Markets have memories' is another popular saying.
This refers to how an important price level can retain its importance for a long time. It could be months, quarters, or even years. With Freeport, there was more than two years between these tops.
Now the stock has again returned to this level, and once again it has found resistance.
Stocks have a tendency to reverse after hitting resistance. This happens when anxious and impatient sellers start to undercut each other's prices. They know the buyers are going to go to whoever is willing to sell at the lowest prices.
Other anxious and impatient sellers see this and they do the same thing. This can result in a snowball effect that forces the price lower.
This is what happened the last two times Freeport reached current levels. It may be about to happen again.
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