Southern Copper vs. Spot Copper: TA That's Hard to Ignore

So above we have a kitco chart of spot copper for the last 5 years, and below we have a bigcharts view of Southern Copper (PCU) for the last 5 years. Err...that's it, really.

Gary from biiwii and others know I don't care much for technical analysis, but it's madness to ignore the kind of relationship shown above, simple as it might be. I've been bullish on PCU since it was around U$23 (split adjusted), and so far it's been one helluva trade. I even went neutral on PCU when it got to U$125, and although it blew out above that a few days later the call was fair (never called it a a sell or a short, though).

Right now? Buy it.

Currently, fear and greed debate on whether miners will continue upwards, whether China commodities demand will slow, whether this that or the other. Most of it is pure noise and comes from people with the analytical capabilities of fruit flies. PCU and other large copper producers are licences to print money, and my totally correct and unbeatable views on copper going forward are already on record. Modest, huh?

So today's market reco?

1. Buy PCU right here right now

2. Take a very long fishing trip, and unless you're a finance professional or you want to foster your own neuroses don't listen to the incessant market chatter.

3. That's all. Have a nice day.

Comments

[SouthShore:]

So ... where's the "technical" analysis other than look at "the chart"? Head-n-shoulders top, maybe? Volume picking up, maybe?

As you point out, this is a global growth story with supply/demand driven support. However, the story has been done to death. Everyone who bought in has done well.

The risk here is the old "buy high" then "sell low" blogging that hedge funds employ before they unload.

2008 Mar 24 11:58 AM

[Ferd Berfl:]

I didn't get in until around $70. Have bought & sold this stock several times & made some money. Currently own it. I've been around the planet long enough to get nervous whenever any commodity gets so extended regardless of the chatter.

2008 Mar 24 01:33 PM

[whisperonth...:]

Love the dividends!

2008 Mar 25 08:21 AM

[ottorock:]

well...not bad. Two smart comments (whisper and ferd) and one chunk of ignorance from the first poster.

Whisper and Ferd have got this play right...it's simple, and it doesn't need a 50 page report to understand this stock. You buy it, you enjoy the dividends (correct whisper) it runs with copper and there's nothing else to say.

As for disappointing you with the lack of TAspeak...well darn sorry 'bout that southshore, but from what i understand terms like "head and shoulders top" are just words used to describe chart patterns. The chart pattern on PCU doesn't need a bunch of fancy terms to nail completely. It goes up. Meanwhile southshore, you should look at the % of insider holdings and then try to explain how the hedge funds could ever rule PCU.

2008 Mar 25 09:50 AM

[WarrenBluffit:]

I am a long-term trader of PCU and CUP. I've bought and sold this stock more times than I can count on both hands and feet, but hindsight being 20-20 I wish I'd just bought and held it. I agree with The Rock. Buy it. Hold it. Take a very long siesta and rest comfortably knowing your copper reserves are hard at work!

2008 Mar 25 10:39 AM

[Barry Sotoero:]

Watch out for JP Morgan, everytime they underweight a company they have a track record of making large purchases. Buy southern Copper on the next dip of $5 to $10. We are going to see $200 with in the next year. This company has great growth potential. Thay have resolved most of the labor disputes that caused them to have a couple bad quarters. They also moved a large potion of their sales to Asia from the US. I believe we will see output increase dramatically over the next couple years. This is a great time to pick up more shares and the dividend has a payout of 1.40 per share. They even paid out a special Div. last year of $2 per share. I was very excited to see it sell off last week so I could purchase more shares and watch it rebound today. Copper is$3.10 at the scrap yards for recycling. That is the highest I have ever seen the metal, there is still demand globally if the price at the scrap yard is high. The guys at the scrap yard will not buy copper at that price is there is nobody buying from them.

2008 Mar 25 03:15 PM