Will FCX and Copper Propel the Penny Stock Market?
Recently we have seen a rally in copper prices, which historically indicates a rally for U.S. equities. Freeport MacMoran Copper and Gold (NYSE:FCX) has come back into favor and has always been a darling of short term traders and hedge fund managers. FCX is one of the few NYSE stocks that moves like a penny stock. Keep in mind that FCX could have a massive move in either direction. The optimism in copper prices last week leads some investors to go long equities. At this point FCX is a good of a barometer for the direction of the market as you can find.
Now if copper continues to rally the S&P 500 could close above 1120. The 1120 range is very important because there is an opinion in some circles that a break of this number will cause massive short covering. A break to the upside should spur some action in not only copper penny stocks, but to many quality OTCBB stocks as well. Now is the time to start getting prepared. One route is to start reading different news stories and compiling a penny stock list and a large cap list. Also, check out penny stock newsletters that have recommended copper and mining stocks in the past. Then break down these stocks into your top ideas. For instance, most traders are familiar with FCX, but don’t know that Southern Copper (NYSE:SCCO) and Encore Wire Corp. (NASDAQ:WIRE) move on copper prices too.
Gold stocks have been beaten up recently but have stabilized due to weakness in the dollar. So while gold and silver penny stocks may rally too, they may play second fiddle to copper related stocks for a brief period. Wheat has also rallied sharply based on the Russian drought. The stars seem to be aligned with the commodity stocks, but this market has provided us with multiple head fakes. So due your research and consider playing some low priced commodity stocks if they make sense for your portfolio.
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