Price and relative strength activity in copper producer First Quantum Minerals (FM.TO) over the last three months provides a remainder of how the SIA Charts relative strength rankings and reports can help investors identify capital flows and identify/manage areas of risk.
Yesterday, First Quantum (FM) shares plunged 28.5% after the Government of Panama announced a referendum on a recent contract signed between the country and First Quantum related to the Cobre Panama copper mine. The referendum, to be held on December 17th, comes in the wake of significant public protests.
There had been ample warning signs for investors, however, that First Quantum’s stock was weakening relative to its peers. On August the 10th, FM.TO was in first place in the SIA S&P/TSX 60 Index Report, and since then it had been trending steadily downward in the relative strength rankings. On October 3rd, it fell out of the green zone into the yellow zone, and on October the 26th it entered the Red Unfavored Zone. In addition, its SMAX score fell to a bearish 5 on August 17th, then to 4 on September 25th. The shares have been on a bearish Point and Figure signal since September 22nd when they staged a Double Bottom breakdown. After a drop of 25 spots yesterday and 46 places in the last month, First Quantum is currently in 61st place in the SIA S&P/TSX 60 Index Report one spot outside of dead last. Distribution in First Quantum (FM.TO) shares has intensified in recent weeks. Since peaking above $38.00 back in August, a new downtrend of lower highs has emerged. Along the way downward, two uptrend support lines had failed to hold and the shares have also dropped below their 50 and 200-day moving averages with a bearish death cross pending.
Yesterday, FM.TO gapped down on the open and plunged down toward $20.00 on a spike in volume, indicating a stampede for the exits. Next potential downside support appears at the July 2022 low near $18.50, then the $15.00 round number on trend. Previous lows suggest initial bounce resistance may emerge near $22.25 or $23.50.
First Quantum (FM.TO) shares have increasingly been coming under distribution since peaking near $39.00 back in August. Last month, a Symmetrical Triangle was resolved to the downside with the snapping of a short-term uptrend line and the completion of a bearish Double Bottom pattern.
Since then, the shares have been in retreat, dropping down toward $20.00 without even so much as a 3-box bounce. What has happened along the way has been the completion of larger bearish Spread Double Bottom patterns and on Thursday October 26th, a longer-term uptrend line was broken.
Next potential support appears at the July 2022 low near $18.75, followed by $15.70 which is based on a vertical count. Initial rebound resistance may appear near $22.00 based on a 3-box reversal.
With a perfect bearish SMAX score of 0, FM.TO is exhibiting weakness across the asset classes.
Disclaimer: SIACharts Inc. specifically represents that it does not give investment advice or advocate the purchase or sale of any security or investment whatsoever. This information has been prepared without regard to any particular investors investment objectives, financial situation, and needs. None of the information contained in this document constitutes an offer to sell or the solicitation of an offer to buy any security or other investment or an offer to provide investment services of any kind. As such, advisors and their clients should not act on any recommendation (express or implied) or information in this report without obtaining specific advice in relation to their accounts and should not rely on information herein as the primary basis for their investment decisions. Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources, believed to be reliable. SIACharts Inc. nor its third party content providers make any representations or warranties or take any responsibility as to the accuracy or completeness of any recommendation or information contained herein and shall not be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon. Any statements nonfactual in nature constitute only current opinions, which are subject to change without notice.
