After spending five and a half months trading in bear market territory, shares of Freeport McMoRan have finally rallied back above their 200 day moving average. The breakout back into bull market territory occured during 4 day stretch of consecutive higher closes that sent FCX to their highest level since August.

Given Freeport’s recent performance, the sideways trading in the stock over the past few days is maybe the least that should be expected. The main issue at this point is whether the newly rangebound FCX represents an opportunity to buy even, if not especially in the short term or if the stock has further to fall.

The selling that has caused the stock to finish lower for four out of the past five trading days has taken FCX to the edge of technically oversold territory. You would have to go back to the spring of 2011 to find the last time FCX was trading oversold above the 200 day average.

Looking back to the spring, we see an FCX that could withstand multiple, consecutive selling days before reversing to rally back into strength. March 2011 featured a 5 day sell off in FCX while a correction in April saw Freeport McMoran slide for seven consecutive sessions.

In both instances, FCX earned consider buying ratings of 8 out of 10 late in the sell-offs, providing active investors and swing traders with a clearer sense of how intense the selling had become and how likely the stock was to respond positively once the selling had exhausted itself. Five days after earning its rating of 8 out of 10 in March, FCX was trading higher by well over 3%.

(Sourced from www.forbes.com)