PD crossin 52wks resistance!!

[OptionPundit]

Folks, recall this was one of another cramer's pick sometime back when he called out PD is gold..cheers ..it's been rising ever since. After a bit of congestion and initial bearish position, it showed gains with higher volumes on Monday...today it's crossing it's 52wks high...booyah...

[Svenwulf]

November 7, 2006

A case for copper, Tues., Nov. 7, 2006, 10:45 AM

Phelps Dodge is up +66.4 pct Y/Y and has set a new 52-week high. Can copper and copper stocks continue north?
Credit Suisse research sums up their perspective on copper as follows: “The 'centre of gravity' is rapidly shifting from the US consumer to the metal-hungry emerging economies. We illustrate that even if US housing starts were to fall by 1 million homes in 2007, the global copper market could still be in deficit next year. In China, restocking of copper inventories seems imminent after the recent credit tightening measures. We predict that India will add 1% to global metals demand every year for the next five years, driven by infrastructure spending. This is creating a ‘snowball effect’. These regions are becoming such a big part of overall global demand today that even small % increases in consumption mean significantly more tonnes consumed. The reality is that industry may not actually be able to keep up and feed the ever increasing demand.”

The Credit Suisse Nov 1 report is extremely bullish. Download CS Metals report. (http://www.billcara.com/CS%20Nov%201%202006%20Global%20hunger%20for%20meta ls.pdf)

The CS research team opines:

“In conclusion, we think we are entering the next phase of this bull market, which is likely to propel metal prices to new levels and set the stage for significant P/E expansion. November and December are traditionally the best two months for the miners globally. Big-cap mining stocks may begin to outperform pure plays as the risk/valuation reward seems more compelling for BHP, Anglo American and Rio Tinto, which have vast project pipelines and significant balance-sheet
capabilities.”

I recommend everybody read this report. I think CS has a good mining research team.
You might want to give pages 18-20 “Ten reasons to buy mining shares” a quick read.
Also, Figure 17 on page 29 (as follows) was surprising to me in that I hadn’t realized the PM weighting in the Goldman Sachs Commodity Index is just 4.77 pct, which is dwarfed by the Ag and Meat groups. Copper has a 9.87 pct weighting and Aluminum 7.34 pct.
http://www.billcara.com/001z015.gif
Phelps-Dodge [GICS 15]
(PD: Yahoo Finance file) (http://finance.yahoo.com/q?s=PD)
(PD: StockChart chart) (http://stockcharts.com/gallery/?PD)
(PD: Investertech chart) (http://www.investertech.com/tkchart/tkchart.asp?stkname=PD&wt=3)
(PD: ADVFN Financial Data) (http://www.advfn.com/p.php?pid=financials&btn=s_ok&symbol=PD&s_ok=OK&reportbug_desc=%E2%80%9D%3E%28PD:%20ADVFN%20Financ ial%20Data%29%3C/a%3E%3Cbr%20/%3E%3Ca%20href=)
At 10:45am, the Euro/US$ is now 1.2804, which is breaking into new high ground, which ought to send these metals prices (including precious metals) higher.


Posted by Posted by Bill Cara on November 7, 2006 10:45:13 AM | Category: 15 Materials (http://www.billcara.com/archives/forums/gics_sector/15_materials/)

[OptionPundit]

Hi Svenwulf, Thanks for sharing below. That's confirm my simple belief..."buy whatever China and India needs". Just look at the rapid growth both are experiencing. While china has already taken the lead, india still needs to develop infrastructure....and a lot of infrastructure.

I had recently posted a PD trade on my blog where I was bearish (i am mostly a options spread trader) after it tried to cross the 103 level and fell back..since I saw the climb and look at copper charts..I have changed my opinion. Converted bear call into to iron and then iron to fly and fly to again iron so I don't lose on it as we are only 9 days into Nov expiration.

Net, I am now more bullish on this then i was last week. thanks for sharing the report.

[Svenwulf]

two sides to every story. i am always more interested in what my opposition has to say than cheerleading. could not source the reuters article, so DD! the below pdf link is much more relevant re base metal discussion.

Gold may feel the pain if base metals turn sour
Mon Nov 6, 2006 10:44 AM ET

ZURICH (Reuters) - An anticipated slump in the overheated base metals market may weigh on gold prices as investors fail to differentiate between gold and metals like zinc and nickel, gold experts said on Monday.

Strong demand from pensions, endowments and hedge funds has pushed prices for base metals to multi-year highs in recent months but some analysts and traders fear that base metals are overbought and prices could collapse.

"Metals is where the speculation is. They are being squeezed and this is an unsustainable situation," said Frank Veneroso, at Veneroso Associates at a gold conference in Zurich.

"This game is going to come apart. If this happens we (gold traders) are not going to escape this carnage," he said.

Nickel and zinc have hit all-time highs of $32,625 per tonne and $4,400 a tonne respectively this year. Zinc has risen by nearly 40 percent in the past month alone.

Gold prices, on the other hand, largely have been stuck in a range since mid-July, after an attempt to recapture May's 26-year high of $730 stalled just below $680.

But despite that more modest rise, gold might also be hit if momentum in the base metals market starts turning.

Pensions often invest in so-called commodity baskets and experts fear that once the base metal bubble bursts they will simply sell their gold positions along with the rest.

"The risk for us in the gold market is a decline in the gold price in sympathy with the base metals," industry expert Paul van Eeden told the conference.

His comments were echoed by Veneroso who said: "In the near-term we have a problem and that is the company that gold keeps. There is a bubble in other metals created by hedge funds behavior almost to the point of madness," Veneroso said.

"There is a contagion risk because of the communality in some portfolios," he added.

Nobody knows if and when a base metals crash will play out, but some expect it within months.

"It could start now and it might go on for a long time," Veneroso said.
--http://www.kitco.com/ind/veneroso/nov062006.pdf

[Svenwulf]

sometimes i get one right:

AP
Freeport-McMoRan Buying Copper Giant
Monday November 20, 8:12 am ET
By Amanda Lee Myers, Associated Press Writer
Freeport-McMoRan's Acquisition of Phelps Dodge Creates Largest Publicly Traded Copper Company
PHOENIX (AP) -- For years, officials at Freeport-McMoRan Copper & Gold Inc. talked about acquiring copper miner Phelps Dodge Corp. But discussions in recent weeks sealed the deal that will create the world's largest publicly traded copper company.
The companies announced Sunday that Freeport-McMoRan will acquire Phelps Dodge for $25.9 billion in cash and stock.Freeport-McMoRan valued its offer at $126.46 per share, well above the $95.02 closing price for Phelps Dodge shares in Friday trading on the New York Stock Exchange.
Each Phelps Dodge share would be exchanged for $88 in cash plus 0.67 of a common share of Freeport-McMoRan.
"The offer that they have brought to us is a 33 percent premium over what our stock price was last quoted at," said Phelps Dodge spokesman Peter Faur. "So for us, it's a very compelling transaction."
Richard C. Adkerson, president and CEO of Freeport-McMoRan, said he and J. Steven Whisler, Phelps Dodge's CEO, began talking and laying the groundwork for "serious negotiations" within the past few weeks.
Adkerson expects shareholders and regulators to approve the deal by the end of the first quarter of 2007. He said acquiring Phelps Dodge provides an opportunity to diversify with an "attractive set of assets."
"This gives us good, future growth opportunities," Adkerson said. In spite of the acquisition price, he believes the move will pay dividends for shareholders.
The cash portion of the transaction totals $18 billion and Freeport-McMoRan said it would issue 137 million shares to Phelps Dodge shareholders. That would give them about 38 percent of the combined company on a fully diluted basis. Freeport-McMoRan's board will also be expanded to include three independent Phelps Dodge directors.
Freeport-McMoRan said JPMorgan and Merrill Lynch have committed to funding the cash portion of the transaction, which will boost its total debt by year-end to about $17.6 billion.
The merged companies will operate under the Freeport-McMoRan Copper & Gold banner, though businesses operating as Phelps Dodge will continue to do so. Adkerson will be the CEO of the merged firms. He said he doesn't anticipate substantial reductions in work force. He did not elaborate, saying only that isn't a significant part of the agreement.
link
http://biz.yahoo.com/ap/061120/freeport_phelps_dodge.html?.v=10

[aiki14]

Nice one wulf man