gold – Theta Bandits

Top Pick Tuesdays – Freeport-McMoRan, Inc.

Theta Bandits — Tue, 14 Jan 2025 09:08:41 +0000

Freeport-McMoRan, Inc. (FCX:NYSE)
Price at Preparation: $39.41 (Jan 13^th, 2025)

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What they do

Freeport-McMoRan, Inc. (FCX:NYSE) engages in the mining of copper, gold, and molybdenum. It operates as follows:

North America Copper Mines: Operates open-pit copper mines in Morenci, Bagdad, Safford, Sierrita, Miami in Arizona and Chino, and Tyrone in New Mexico.
South America Mining: Includes Cerro Verde in Peru and El Abra in Chile.
Indonesia Mining: Operates the Grasberg minerals district that produce copper concentrate containing significant quantities of gold and silver.
Molybdenum Mines: Includes the Henderson underground mine and Climax open pit mine, both in Colorado.
Rod and Refining: Consists of copper conversion facilities located in North America and includes a refinery, and rod mills.
Atlantic Copper Smelting and Refining: Smelts and refines copper concentrate and markets refined copper and precious metals in slimes.
Corporate and Other: Offers oil and gas operations, and other corporate and elimination items.

Welcome back to Theta Bandits Top Pick Tuesday, where we search the markets to bring you fresh ideas that could be a potential winner in any portfolio.

Opinion

Freeport-McMoRan, Inc. (FCX:NYSE) is a stock that is always on my radar primarily for the exposure to the copper market, which should be in high demand for infrastructure/construction wiring, and EV motors as two examples. You might ask: “if it is always on the radar, why we are bringing this to your attention today?”

The answer is two words – “technical analysis”.

Over the past year the stock has traded within a range, using historical data as our guide there is a high probability that the pattern will repeat. This is shown in the chart (plan section below) with the yellow lines. While the stock is trading near it’s 52-week lows, it is starting to show some upside potential, which we can try to take advantage of!

A second data point to consider is the analyst street consensus, which has 16 Buys, 9 Holds, 1 Sell with 12-Month Price Targets (PT) as follows:

Low: $46.00 USD (+16.72%)
Average: $53.91 USD (+36.97%)
High: $62.00 USD (+57.32%)

Plan

As usual, find the chart below with following colors marked:

Blue: 52-week high.
Red: 52-week low.
Green: 12 Month PTs (high / avg / low).
Orange: Support/resistance lines.
Yellow: Our plan.

Since we mentioned the reason for the trade is “technical analysis”. Let’s breakdown the chart below and produce a potential plan. As usual we have the 52-week high / lows marked as well as the 12-month price targets (PT). As mentioned previously there are yellow arrows marked on the chart, these are showing the pattern within the range of the year and after a downtrend the stock usually has a nice rebound, which is what we are looking for. Towards the end of 2024 and beginning of 2025, this latest downtrend is looking to start a rebound, if this holds course and moves up, potential targets have been identified on the orange support / resistance lines of $44.40 USD, $47.07 USD and $50.77 USD. Since the stock will be getting to the top of last year’s range, there are two bonus levels at $52.46 USD and the 12-month average PT of $53.91. Nearing the top of the range there is more risk of reversal, hence the levels to secure profit should be tighter. Notice the 12-month high PT of $62.00 USD is being ignored as this is out of the trading range plan. Not all trades go our way and since we are looking for a trade in a range, we have identified the previous 52-week low of $36.26 USD as a point to cut the trade with a small loss. Also make sure to use and update stop-losses to protect the initial investment.

Once in the trade, those familiar with our methods know we like to mitigate risk on everything. This can be achieved by securing as much of the original investment as possible, until there are only profits remaining to do the heavy lifting for the remainder of the trade – risk free!

This is only one method how to trade this stock. We discuss other potential methods to attack this stock through our discord server community and we will discuss this trade live IF you sign up to attend our Theta Bandits Webinar – When we trade together, we learn together!

RISKS

The goal is to grow capital by securing profits along the way and limiting losses. Make sure to plan to trade within your risk tolerance, allowing time for success while updating limits and exit points to mitigate risk.

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Disclaimer: This article is for informational and educational purposes only, not investment advice. We recommend researching and consulting with a financial advisor before making investment decisions. All actions based on this information are at your own risk.

Top Pick Tuesdays – December Picks Update

Theta Bandits — Tue, 23 Jan 2024 14:00:00 +0000

This week we are revisiting our final Top Pick Tuesday’s from December 2023. While it has not been a long time since posting these ideas, this update serves as a reminder of the challenges in this ever-evolving business. We had fantastic results in November, but unfortunately December’s progress is far from glamorous but as the expression goes: “if you don’t win, you learn”. Let’s dive in and see what happened!

Pick #1 – Barrick Gold Corp

Barrick Gold Corp (GOLD:NYSE)
Price at Preparation: $17.73 (Dec 1, 2023)
Price at Update: $15.59 (Jan 22, 2024)
Gain/Loss: -12%

Update

Barrick Gold Corp (GOLD:NYSE) was chosen on the back of the gold commodity price breaching $2000 USD per ounce. As of this update, the spot gold price has risen up to approximately $2040 USD per ounce. Looking at the visual guide included, we can see there was an initial upward trend before displaying weakness at the start of 2024. This stock has come down to our support line at $15.54, historically a point of potential rebound. However, if the stock continues to decline past the support at $14.14, that is earmarked as the point to cut the position completely. The Price Target (PT) of $21.23 remains unchanged, which still offers a meaningful upside. Since gold is cyclical, there is a high probability of a rebound.

Pick #2 – iRobot Corporation

iRobot Corporation (IRBT: NASDAQ)
Price at Preparation: $38.63 (Dec 11, 2023)
Price at Update: $17.38 (Jan 22, 2024)
Gain/Loss: -55%

Update

iRobot Corporation (IRBT: NASDAQ) is facing headwinds. Chosen for it’s upside potential on the Amazon (AMZN:NASDAQ) buyout offer of $51.75 USD per share, which at this time remains unchanged. However, the purchase needs to still be completed and agreed to by the world’s regulators. Recently the stock plunged approximately 40% in one day due to news that said the ECB (European Commission Board) intends to reject the deal, where the deadline for the decision is February 14, 2024. The word “intends” is not definitive and Amazon has refused to comment – So the original plan stands until confirmed news that alters the course of this deal.

Pick #3 – NIO Inc

NIO Inc. (NIO:NYSE)
Price at Preparation: $8.42 (Dec 22, 2023)
Price at Update: $5.98 (Jan 22, 2024)
Gain/Loss: -29%

Update

Our final pick of 2023, NIO Inc. (NIO:NYSE), was driven by news catalysts showcasing new battery technology and long range potential. However, the hype was short-lived. Looking on the visual aid below, you can see the stock gained momentarily above the $9.24 support/resistance line before embarking on a downtrend through multiple support lines. Breaching the previous 52-week low of $7.02, the stock slid to $5.98. As per the original plan, exiting the trade at our “cut” level is the strategy, looking for the next opportunity.

For updated content on all our Top Pick Tuesdays, consider our Theta Bandits Discord community, a hub for traders to share ideas and strategies for various tickers daily.

Top Pick Tuesdays – Barrick Gold Corp

Theta Bandits — Tue, 05 Dec 2023 05:26:49 +0000

Barrick Gold Corp (GOLD: NYSE)
Price at Preparation: $17.73 (EOD Friday Dec 1, 2023)

What they do

Barrick Gold Corporation is a Canadian-based gold and copper producer. The Company is principally engaged in the production and sale of gold and copper, as well as related activities, such as exploration and mine development. The Company has ownership interests in producing gold mines that are located in: Argentina, Canada, Cote d’Ivoire, the Democratic Republic of the Congo, the Dominican Republic, Mali, Tanzania and the United States. The Company’s operations include Nevada Gold Mines, Bulyanhulu, Hemlo, Jabal Sayid, Kibali, Loulo-Gounkoto, Lumwana, North Mara, Porgera, Pueblo Viejo, Tongon, Veladero and Zaldivar.

Opinion

If you’ve missed the recent surge in gold prices, this shiny metal has soared to unprecedented heights, once again breaching the $2000 USD per ounce mark. At Theta Bandits, our eyes are locked onto this upward trajectory, focusing on a specific ticker amidst this lucrative movement. Keep in mind, there are varied routes to tap into gold, either through gold producers like today’s pick of Barrick Gold Corp or via vehicles more closely linked to the pure bullion spot price, albeit potentially more volatile. Gold is a player in the metals cycle, and our strategy is tuned to ride this cycle, securing profits at defined levels while safeguarding our capital to help minimize losses.

Plan

Let’s chart our course, beginning with a glance at the visual aid below. Casting a glance leftward on the chart, we notice a robust foundation—a strong support line from which the price has leaped multiple times. Fast forward to the present, and we find the current price aligning with that same support/resistance line. Should the price breakthrough above the green line, history suggests a high likelihood of a repeated upward pattern. Analysts tout a 1-year average price target of $21.11, marking a robust 19% upside potential—a figure that sings sweetly to any investor’s ears.

Securing Profits:

As the price strives to breach the green support/resistance line, a confirmed breakthrough signals the starting gun for profit capture at each surpassed orange line level. Elevating stops while pocketing profits stands as a savvy strategy to maximize gains as the play unfolds. Although the 1-year target rests at the second orange line, historical stock performance hints at the potential for further ascent. The upper range of analysts’ 1-year price target, clocking in at $25.56, as depicted below, implies a cautious yet rewarding risk-to-reward strategy, advocating for a final exit near the $25.44 orange line marker.

Cutting for a Loss:

Initiating a position and witnessing the stock price turn south prompts the crucial question: how much wiggle room is advisable? Referencing our earlier diagram highlighting a sturdy bounce-off point at $14.14, if the stock breaches this level downward with no other stops in place, cutting the position at this juncture becomes prudent—take a moment to lick your wounds, reflect and gear up for the next trading opportunity.

Maximizing Potential:

The lure of options as an avenue to magnify gains is undeniable, yet it comes hand in hand with heightened risk. Revisit our past picks, particularly those involving covered calls. This strategy necessitates at least 100 shares per contract, a potentially capital-intensive move. Given the cyclicality of this play, employing longer-dated options with a strike just above the final target price appears as the safest approach when venturing into option selling with more advanced traders employing shorter timeframes with more aggressive targets for further profit.

RISKS

The truth is that trading and risk are inseparable companions. While this plan sketches out some safety nets, trading’s inherent risk demands thorough analysis and comfort with the strategy before taking any action. Embrace the ‘paper account’ as your practice ground—where your trading skills flex and refine—before deploying your hard-earned funds into action.