SCCO trade ideas
Probably the best copper mining stock out there !See chart for analysis.
Logic is quite simple - to reignite the economies worldwide, governments would have to spend a lot on infrastructure projects to create jobs. Copper, as one of the key commodities in many infrastructure projects would be in high demand.
And this chart is showing the price action being depressed for quite a while. It has now broken out of the bearish trend and is preparing its bullish move.
There is a high likelihood we see some consolidation here before it breaks out and soar higher.
You can put this in your watchlist !
HG1!Southern Copper Corporation is an integrated copper producer. It produces copper and, in the production process, obtains several by-products, including molybdenum, silver, zinc, sulfuric acid and other metals. Its segments include the Peruvian operations, the Mexican open-pit operations and the Mexican underground mining operations segment identified as the IMMSA unit. The Peruvian operations segment includes the Toquepala and Cuajone mine complexes, and the smelting and refining plants, including a metals plant industrial railroad and port facilities that service both mines. The Mexican open-pit operations segment includes the La Caridad and Buenavista mine complexes, and the smelting and refining plants, including a metals plant and a copper rod plant, and support facilities that service both mines. As of December 31, 2016, the Mexican underground mining operations segment included five underground mines that produce zinc, copper, silver and gold, a coal mine and a zinc refinery.
SCCO
HG
AMEX:COPX
Retested daily breakout, looks bullishAlthough SCCO completed the bearish gartley, the pullback tested the daily breakout. Should keep above the daily trendline and go for a new high. This move is playing on weekly double bottom so very likely for bullish continuation.
Strong resistence cluster around the 30 mark, supply. If this breaks look for 35.63 harmonic target on bearish crab.
Expecting a ReversalHISTORY:
Southern Copper Corporation ("SCCO/NYSE") is one of the largest integrated copper producers in the world. They produce copper, molybdenum, zinc and silver. All of their mining, smelting and refining facilities are located in Peru and Mexico and they conduct exploration activities in those countries and in Argentina, Chile and Ecuador. Their operations make them one of the largest mining companies in Peru and Mexico. They might have the largest copper reserves in the world. They were incorporated in Delaware in 1952 and have conducted copper mining operations since 1960.
TECHNICAL:
NOT ONLY we are approaching nice technical levels to look for short opportunities, i.e.
33.20 is 50% retracement and
35.25 a 61.8% of retracement level of the impulsive leg (from 42 to 25)
AND
price is testing declining trend-line.
FUNDAMENTAL:
It seems that the fundamentals are also in favor of this trade.
The slow down in China's growth and it's declining Copper import will support this idea. You could read more on this in (harrydent.com)
In addition to this,
i) Southern has the highest price-to-earnings (P/E) ratio among its peer. This is a classic measure of “value,” showing Southern is currently not a good one.
ii) Southern’s price-to-sales (P/S) and price-to cash (P/C) ratios — two other measures of valuation — are also one of the highest of all copper miners.
iii) Again, Southern’s price-to-book value (P/B) is higher than each of its peers. In fact, it’s about 270% higher than Freeport-McMoRan’s and 825% higher than Sterlite, an Indian miner!
iv) Southern’s debt-to-equity ratio, a measure of its debt load, is higher than any of its peers. It’s more than four-times worse than Freeport-McMoRan’s.
CONCLUSION:
This is a long term trade, and it is most likely that this stock test the lows of 2009 below $10.
P.S.
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Big Call Buyers in SCCOSouthern Copper Corporation (SCCO) is a company that produces copper, zinc, and silver. The company’s stock is currently trading around $32.45 in a 52 week range of $24.50-$40.48. The stock has greatly underperformed the market over the past year with share prices falling over 19% in the past 12 months. In recent months however, the stock has been relatively strong with shares gaining nearly 20% in the past 3 months. Options activity in SCCO during today’s trading session suggests that this recent trend could continue. Earlier in the session a trader bought 9,750 SCCO Sep 37 Calls for $0.95. This trade also represents volume over 7.7 times the average daily option volume in SCCO. We believe that this order flow in SCCO justifies a long position in SCCO.
