Technicals | Dec 11 2012
This story features RIO TINTO LIMITED. For more info SHARE ANALYSIS: RIO
By Michael Gable
During the last several weeks, we have had data out of China indicating that the economy has possibly seen the bottom. After seeing the bounce back in the iron ore prices a few months ago, investors needed more evidence that the current iron ore prices were sustainable. We have possibly seen enough now to get back into the iron ore stocks. Those not wanting to catch a falling knife needed to see evidence of a reversal in the share prices. Rio Tinto ((RIO)) in particular has now, in my opinion, shown good signs of a reversal. As a result, we can now safely consider picking up some of these stocks. I have also looked at Fortescue Metals ((FMG)) and Atlas Iron ((AGO)) in this morning’s report.
Rio Tinto
RIO is back to where it was 12 months ago. In that time it has traded as high as $72 and as low as $49. When the downtrend started 18 months ago, it was nearly as high as $90. Particularly since May, RIO has really struggled to go anywhere thanks to a rush to high yielding defensive stocks and a collapse in the iron ore price. In the last few days we have seen RIO test a key level of resistance and break through it. Provided that it can hold here (and the recent move is not a false break), we can now feel much more comfortable that the downside in RIO has been contained, and we can start looking for opportunities to buy it. I can see that the 18 month downtrend has possibly ended now with a “reverse head and shoulders” pattern having developed. Initially this type of move can see the stock rally up towards $69 – $70. This also happens to be a full 50% retracement of the 18 month downtrend, which is where a stock will often find resistance.
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Visit Michael Gable's website at www.michaelgable.com.au/.
After leaving Macquarie Bank's Securities Group in 2008 after many years of service, Michael has gained a highly regarded reputation in the financial services industry. As a Private Client Adviser with Novus Capital, Michael has become a popular live commentator and analyst for Sky News Business Channel’s “Your Money, Your Call” program. He is also the author of the weekly stock market report “The Dynamic Investor”.
Michael assists investors to achieve their goals by providing advice ranging from short term trading to longer term portfolio management.
Michael 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 (Rep. No. 376892) of Novus Capital Limited AFSL 238168 ACN 006 711 995. Michael Gable and Novus Capital Limited, their associates and respective Directors and staff each declare that they, from time to time, may hold interests in securities and/or earn brokerage, fees, interest, or other benefits from products and services mentioned in this website. This website may contain unsolicited general information, without regard to any investor's individual objectives, financial situation or needs. It is not specific advice for any particular investor. Before making any decision about the information provided, you must consider the appropriateness of the information in this website or the Product Disclosure Statement (PDS) or Financial Services Guide (FSG), having regard to your objectives, financial situation and needs and consult your adviser. Any indicative information and assumptions used here are summarised and also may change without notice to you, particularly if based on past performance. Michael Gable and Novus Capital Limited believes that any information or advice (including any securities recommendation) contained in this website is accurate when issued but does not warrant its accuracy or reliability. Michael Gable and Novus Capital Limited are not obliged to update you if the information or its advice changes. Michael Gable and Novus Capital Limited and each of their respective officers, agents and employees exclude to the full extent permitted by law, all liability of any kind, in negligence, contract, under fiduciary duties or otherwise, for any loss or damage, whether direct, indirect, consequential or otherwise, whether foreseeable or not, to the extent arising from or in connection with this website.
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