Signal Says Buy the Dip on This Mining Stock

SCCO has pulled back to its 40-day moving average

Deputy Editor
Feb 23, 2023 at 2:50 PM
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Southern Copper Corp (NYSE:SCCO) stock is down 1.7% to trade at $72.42 at last check, despite a price-target hike from UBS to $51 from $48. The stock has been consolidating around the $75 level since mid January, with support at the $72 level. There is reason to believe the shares could soon stage a breakout, however, as today's pullback has SCCO within one standard deviation of their 40-day moving average -- a trendline with historically bullish implications. 

Over the past three years, SCCO has seen four similar signals, after which the stock has been positive one month later 100% of the time, averaging a 10.6% gain. A move of similar magnitude would push SCCO above $80, its highest level since May of 2021.

SCCO Feb23

Southern Copper stock's 14-day relative strength index (RSI) of 25.9 sits in "oversold" territory, which typically indicates the stock is overdue for a short-term bounce. IShort interest makes up 7.1% of the stock's available float, so there's intriguing short squeeze potential as well.

Now could be a good time to weigh in on the security's next move with options. The stock is seeing attractively priced premiums at the moment, per SCCO's Schaeffer's Volatility Index (SVI) of 35%, which sits in the 18th percentile of its annual range. 

 

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