In short, re-opening a short position in the FCX (FCX is at $34.72 at the moment of writing these words) is now justified from the risk to reward point of view.

I wrote that FCX was quite likely to move higher, and that’s exactly what happened.

I wrote that a “relief rally” in stocks would be likely to take place due to the looming deal on debt ceiling (in my view, it was obvious that it will end this way, but the market got scared), while at the same time gold’s gleam might get dimmed along with the safe-haven demand for it.

Indeed, stocks moved visibly higher today, gold first moved higher and now it moved back down, so it seems that it just verified the breakdown below its rising support line.

This specific dynamic made me write about taking profits from FCX but keeping the short position in junior mining stocks intact.

And while the FCX is up by over 3% today, the GDXJ is up by about 0.5%. So, it seems that the situation developed exactly in tune with my expectations.

What’s next? It’s not 100% certain that the corrective upswing in the FCX is over, but it’s likely enough for me to write about getting back on the short side of this stock. The initial downside target is at about $24 - $26, but I’ll keep my eyes open, and I’ll report to you if I think that it’s a good idea to adjust the position before those levels are reached (just like I did earlier this week).

Congratulations on re-entering the short position in the FCX at higher levels than those at which you took profits from the previous short position!

In my view, profits from short positions in FCX and GDXJ are going to be truly extraordinary in the following weeks / months.

As always, we’ll keep you - our subscribers - informed.

Thank you.

Sincerely,
Przemyslaw K. Radomski, CFA
Founder, Editor-in-chief