Downturn for resource stocks

[el_ninj0]

Anyone know why there might have been a downturn in the value of resource stocks? Its been a growing trend over the past 2 weeks or so.

 

[markrmau]

Re: Downturn for Resource stocks.

I think the downturn is just noise, so it is worth trying to counter trade it.

Basically, no one knows how long the recent raw materials 'super cycle' will last. Every few months someone pops up and says that this could be the peak, and everyone gets the heebie jeebies and sells (happened late last year when BHP was about $14 as well from memory).

However, think of this: we are increasing exports of Cu and Au to India (todays AFR), the Chineese / Japaneese are making a hell of a fuss over coal and iron ore prices, and look at the shenanagins with Cu on the Shanghai futures exchange.

I think we have only just scratched the surface of the commodities super cycle. You wait till India gets up to speed and competes with China for raw materials.

"The meek shall inherit the earth, but not its mineral rights"

 

[el_ninj0]

Re: Downturn for Resource stocks.

Yer I realise we have alot more growth ahead of us. But what is going to happen in the mean time?

Im in MGX and AZR at the moment, and they both seem to be steadily going down, which I cant say im too happy about.

I know they both have big long term futures, but im uncertain about the short term.

 

[Bertha]

Re: Downturn for Resource stocks.

this is just a thought, and I hope that nobody thinks that it is naive, but I do wonder how much share prices are affected by little people like me (us?) sitting in our home office in front of a computer, with an over-priced share-trading-programme?
I am using Etrade, and from the course of trades and market depth, it is quite easy to see that a lot of the traders are just little people (like me) trying to make a few dollars (like me) and getting a bit scared when the price drops(like me) ( And yes, I have learnt to use a pretty stringent stop- loss, and it probably took me a few too many bigger than necessary losses to gain the experience to recognize the need for it ( hopefully like a lot of you!)

The point that I am trying to make is this. I beleive that a lot of the market activity in the smaller stocks is being driven, not so much by trends, but by inexperienced novices like myself.

Would any one out there agree with this???

 

[Smurf1976]

Re: Downturn for Resource stocks.

Yer I realise we have alot more growth ahead of us. But what is going to happen in the mean time?

Im in MGX and AZR at the moment, and they both seem to be steadily going down, which I cant say im too happy about.

I know they both have big long term futures, but im uncertain about the short term.

Very enthusiastic about commodities long term but I am thinking that the world economy is starting to slow and that we may be near a commodities peak for the moment. Not THE peak but an interim one.

I suggest watching the value of the Aussie Dollar if you want an easily available "all in one" indicator for commodities markets. We export lots of commodities and if the price is going down then our Dollar ought to do likewise.

 

[markrmau]

Re: Downturn for Resource stocks.

Bertha, before jumping on or off the trend, I try to work out exactly why the stock seems to be trending that way. Have there been meaningful changes that would indicate the stock was under or over valued previously? Has there been much ramping on various stock forums? Has the trend now been over done? As you suggest, this is really needed for the small spec stocks.

Try looking up the last 1 year price history for fcn and nms, then have a look at the chatter in the various stock forums.

Sorry, I dont know much about mgx or azr, so my previous bullish comments may be not be relavant for these 2 stocks. I actually had bhp in mind (but this is not a recommendation to buy bhp)

 

[doctorj]

Re: Downturn for Resource stocks.

Has there been much ramping on various stock forums? Has the trend now been over done? As you suggest, this is really needed for the small spec stocks.

Try looking up the last 1 year price history for fcn and nms, then have a look at the chatter in the various stock forums.

This is something I suggested here. It really is a chicken-or-the-egg problem though. The majority of forum posters are poorly educated (as far as trading is concerned) people who jump aboard a bull-drawn bandwagon hoping to get rich quick. These people are naturally drawn to penny stocks that make high % gains. The more consistent these gains are in a short time frame, the more these types of people are attracted to them and from then on it becomes a self-fufilling prophecy. For everyone that succeeds there is a dozen that don't, but tales of easy winnings keeps these people coming back until reality bites.

I still would like to know how to trade this phenomenom, beyond not touching a stock that has received lots of attention in the forums.

 

[markrmau]

Re: Downturn for Resource stocks.

This is something I suggested here. It really is a chicken-or-the-egg problem though.

.....

I still would like to know how to trade this phenomenom, beyond not touching a stock that has received lots of attention in the forums.

Yes, interesting thought - maybe could be a good entry point -> sudden sustained jump over a few days in posting frequency.

Exit point -> start thinking about it when rediculous prices for the stock are suggested (like nms to $8 LOL).

May be difficult though.

Cheers, Mark.

 

[stockGURU]

Anyone know why there might have been a downturn in the value of resource stocks? Its been a growing trend over the past 2 weeks or so.

Well, eight years later there is another downturn in resource stocks, and it seems mining stocks are getting smashed across the board. Many solid producers with loads of cash have more than halved in price since the start of 2013. Some of been hammered even harder than that.

The big question is, when will mining stocks bottom out and begin to rebound?

 

[Paavfc]

Well, eight years later there is another downturn in resource stocks, and it seems mining stocks are getting smashed across the board. Many solid producers with loads of cash have more than halved in price since the start of 2013. Some of been hammered even harder than that.

The big question is, when will mining stocks bottom out and begin to rebound?

Lets hope this is capitulation and the bottom.

 

[So_Cynical]

New 52 week lows.

• TRY - Troy
• NCM - Newcrest
• WHC - Whitehaven
• WSA - Western Areas
• OZL - Oz
• PNA - Panaust
• AGO - Atlas
• LYC - Lynas

And there's heaps more...a real rout and across the board, opportunities coming up for sure.

 

[skc]

New 52 week lows.

• TRY - Troy
• NCM - Newcrest
• WHC - Whitehaven
• WSA - Western Areas
• OZL - Oz
• PNA - Panaust
• AGO - Atlas
• LYC - Lynas

And there's heaps more...a real rout and across the board, opportunities coming up for sure.

WHC and NCM are 4.5 yr lows. OZL and AGO at 4 yr low. PNA at 3 yr low.

The problem with all these resource stocks is that they have high cost structure and poor operation execution. They might get by in the boom times, but with falling commodity prices they live in a very unforgiving environment.

Look at SLR today who reported that their $70m project in Jan turned out to cost >$100m by March. WTF are they doing? Don't they keep track of construction activity and progress? They deserve to be smacked 16% for being incompetent.

Having said that, the gold sector is probably short term oversold. Spot gold is down probably $50/oz recently but many names are down 30%. Unless their margin was only $150/oz it seems a bit overdone. Of course spot gold could fall another $80 tonight so who knows.

 

[Whiskers]

Lets hope this is capitulation and the bottom.

I doubt it.

Probably the main reason the stock markets driven by the US which recently reached record highs, is because the US had pushed interest rates to the floor causing people who would ordinarly leave cash in interest bearing deposits and for inventory, to invest more cash in the artifically stimulated US stock market(s).

I'd suggest people are taking profits out of record highs and tending to move back to cash, new vehicles, property, business development and inventory in anticipation of increased inflation and need for higher business capital for stock turnover, particularly in the US.

Aus, ie the RBA, has a bit different Monetary policy to the US, hence our interest rates have stayed (in my opinion) higher for too long. The net result combined with our fiscal policy started driving up the cost of business here some time ago. I'm thinking the miners are the thin end of the wedge for our market in the short term.

Given the size of the US combared to Aus, it won't take much cash flowing back to the US to hurt us bad from here.

 

[chops_a_must]

Lets hope this is capitulation and the bottom.

We've got another 10% at least on the mining index to go.

And around 5% on some of the major stocks IMO.

The catching volume just isn't there yet.

 

[drsmith]

BHP and RIO began underperforming the broader market in Q3 2011.

The RBA began its current cycle of interest rate reductions in November 2011.

 

[chops_a_must]

We've got another 10% at least on the mining index to go.

And around 5% on some of the major stocks IMO.

The catching volume just isn't there yet.

We could be close to an exhaustion bottom.

No need to play it though IMO.

Too many opportunities as there is.