Potential short-term trading idea: OZ Minerals

I have been short OZL for most of 2013 and reiterate my call that on a fundamental basis OZL is still a long way off being a company of long-term investors.

In my last note on OZL I stated that it would fall through $4.00, all the way to $3.50 and then to $3.25 if support wasn’t found at the first level.

OZL has now hit a year-to-date low of $3.23 and is showing signs of holding the $3.25 support level, which could be a short-term trading idea.

I see potentially a very short bounce in the stock to $3.50 and $3.60, as short-term traders look to cash in on its slide down its bottom Bollinger band, as it is now a stock that may now be oversold.

I am very cautious of the copper price and on current trends would have a potential stop in at $3.18 - five cents under the year-to-date low - with a limit at $3.55 as this is a high-risk trade.

This trade should be undertaken over a two-week timeframe as the natural move in the share is lower, but it is due a pop and I see this potentially happening in the next few weeks.   

The other way to possibly play OZL could be to sell on strength. The graph highlights its weakness and it could advantageous to short on strength, with a potential stop around $3.55 (if it starts to move higher on the copper prices),  and a limit at $3.00, as a $1 slide in three months would be a signal for buying an oversold stock, and would most likely bounce.

This is a short trade on technicals and trade sentiment alone.


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