Iluka In Positive Trend

This story features RIO TINTO LIMITED, and other companies. For more info SHARE ANALYSIS: RIO

By Michael Gable 

After yesterday’s dramatic sell-off in the miners, our negative comments on Rio Tinto ((RIO)) last week and on BHP Billiton ((BHP)) the week before have meant that we need to take another look at our support levels and see if anything has changed. From their intraday highs, RIO has fallen about 14% and BHP about 9% (including the dividend). With a support level of $60 for RIO, if it breaches that, then expect the low $50’s. BHP has already fallen through our target of $37. The next level down is $35. If that can’t hold, then expect the low $30’s. We have all been reminded how quickly the miners can move so paying attention to the charts is paramount to gaining an advantage. On forecast earnings, BHP is yielding 3.76%, so any dip under $35 will likely result in buying pressure, and representing an over 10% saving compared to those who blindly followed the media experts in buying BHP after their results when it was trading over $39. We mentioned a trade in David Jones ((DJS)) a couple of weeks ago, and we can see some other trading opportunities in the retailers. A risky one with The Reject Shop ((TRS)) and a more compelling opportunity with Harvey Norman ((HVN)). We have a look at Iluka Resources ((ILU)) today.
 

Iluka Resources

 

When we looked at the chart of ILU in October we were anticipating a fall from about $10, down towards $8. Since then, the share price has managed to trend higher. You will notice on the chart that it has been forming higher highs and higher lows. We need to ensure that it holds the previous swing low at $9.16 (indicated by the dotted line). If it breaks that, then it may head back towards the $8 level again. If ILU can continue trending like this, then the next level of resistance is up near $10.40.

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Michael Gable is managing Director of  Fairmont Equities (www.fairmontequities.com)

Michael assists investors to achieve their goals by providing advice ranging from short term trading to longer term portfolio management, deals in all ASX listed securities and specialises in covered call writing to help long term investors protect their share portfolios and generate additional income.

Michael is RG146 Accredited and holds the following formal qualifications:

• Bachelor of Engineering, Hons. (University of Sydney) 
• Bachelor of Commerce (University of Sydney) 
• Diploma of Mortgage Lending (Finsia) 
• Diploma of Financial Services [Financial Planning] (Finsia) 
• Completion of ASX Accredited Derivatives Adviser Levels 1 & 2

Disclaimer

Michael Gable is an Authorised Representative (No. 376892) and Fairmont Equities Pty Ltd is a Corporate Authorised Representative (No. 444397) of Novus Capital Limited (AFS Licence No. 238168). The information contained in this report is general information only and is copy write to Fairmont Equities. Fairmont Equities reserves all intellectual property rights. This report should not be interpreted as one that provides personal financial or investment advice. Any examples presented are for illustration purposes only. Past performance is not a reliable indicator of future performance. No person, persons or organisation should invest monies or take action on the reliance of the material contained in this report, but instead should satisfy themselves independently (whether by expert advice or others) of the appropriateness of any such action. Fairmont Equities, it directors and/or officers accept no responsibility for the accuracy, completeness or timeliness of the information contained in the report.

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