Southern Copper Shares Recover After Two-Week Decline

Shares of Southern Copper Corporation SCCO are rebounding on Wednesday after experiencing two weeks of downward trends. This volatility has stemmed from concerns over how impending tariffs may impact the company’s profitability.

Some investors faced losses as they attempted to predict the end of the selloff, purchasing shares prematurely. However, others with a more strategic approach seized the opportunity to buy at lower prices on Tuesday, allowing the market’s behavior to guide their trading decisions. This strategic buying is a key reason why Southern Copper has been designated as our Stock of the Day.

Understanding Technical Analysis

Technical analysis serves as an insightful tool when understood and applied effectively. This discipline studies the psychology of investors and traders, recognizing that emotions play a central role in creating the patterns visible on price charts.

For instance, support levels in the market often emerge due to the actions of sellers who regret their previous decisions. When these individuals sell and then observe prices rising, they may feel inclined to buy shares back, especially at the same price at which they were sold.

Market Dynamics of Southern Copper

As demonstrated in the stock charts, the $86.00 price point served as a resistance level for Southern Copper in both August 2023 and January 2024. After a downward price trend, many sellers felt confident in their decision to sell. However, in March 2024, this resistance was breached, causing a significant upward movement in share prices.

When shares surged past this resistance, many sellers reconsidered their decisions, expressing a desire to repurchase their shares at the price they had sold. Consequently, when the price returned to approximately $86.00 on Tuesday, these sellers entered the market as buyers, leading to a substantial volume of buy orders and forming a new support level at this previously identified resistance.

Trading Strategies for Declining Stocks

When contemplating a purchase of a declining stock, traders should identify historical resistance levels. There’s a significant likelihood that the stock might locate support at these levels and reverse—as demonstrated by Southern Copper’s recent performance.

Read Next: Fed’s Beige Book Shows Slight Growth: Consumer Spending Slips As Prices Rise

Photo: Shutterstock