I bought 20 Dec 39 calls on FCX for $1.00. This is a play on the metals with about 50% risk on a $2000 outlay. I’m looking for a move to around $40.50 and will look to exit if the 7 day moving average is broken.
My natural tendency is to look for excuses to play the market and its components lower. That said, I am having a difficult time trying to convince myself to get short after last week’s rally. The #1 reason has to do with the US dollar. No matter how I slice it, the dollar from a technical point of view, is poised to go lower. In the chart below, we can see some of the pattern setting up. The most bullish thing I can say on the dollar is that it may be set to consolidate slightly over the coming weeks.
Historically, a lower dollar leads to rallies in stocks and makes it more advantageous to play the upside in the market. Metals tend to perform the best when the dollar is falling and stocks like FCX and X are showing some interesting bullish patterns. I am looking at calls in the metal area into the close. I may wait til the morning to put a play on. I am waiting to see how the hourly charts set up into the close.