FMG - Fortescue Ltd

[Logique]

Purely technically, not unreasonable to hope for 6.50 - 7.00 as the next waypoint in the sp, but none of us can guess the time frame. So a decent call GG.

 

[Tysonboss1]

Not just technically, I can see this stock being easily worth $7 by the end of the year should the iron price hold above $100.

I do hope it drops back below $5 at some stage though because I don't actually own any shares yet,

 

[Garpal Gumnut]

Purely technically, not unreasonable to hope for 6.50 - 7.00 as the next waypoint in the sp, but none of us can guess the time frame. So a decent call GG.

Thanks L,



I've been loading up on FMG with a stop at $5.20.

A more recent chart.

gg

 

[tinhat]

FMG is experiencing a solid rally. I don't want to commit any more funds into the stock market at the moment, otherwise I would buy some more as I feel this rally could have a way to go yet. On the weekly chart the MACD crossed over into positive last week with a nice degree of separation from the signal line.

I've also noticed that FMG is starting to come up again on the radar overseas too. If US investors keep bullish they may start looking for more overseas opportunities such as FMG.

http://seekingalpha.com/article/424201-get-on-board-the-iron-ore-train
http://www.reuters.com/article/2012/03/09/markets-ratings-idUSWNA207720120309
https://wwss.citissb.com/adr/common/file.aspx?idf=2567

 

[Garpal Gumnut]

Not just technically, I can see this stock being easily worth $7 by the end of the year should the iron price hold above $100.

I do hope it drops back below $5 at some stage though because I don't actually own any shares yet,

I will not be greedy and will sell at $7 or thereabouts.

gg

 

[skc]

While FMG has powered ahead, the share price of the two other smaller iron ore producers are behaving very differently. AGO is still 30% off its year high in a sideway pattern, while MGX is languishing at the year low and poised to breakdwon further.

These 3 stocks used to have good correlation but that has really broken down since Feb. Perhaps there are more fundamental reasons driving the divergence, or may be it's just a result of fund flows in the short term. Interesting to see if / how they converge.

 

[notting]

Interesting to see if / how they converge.

FMG is appearing to look a little afraid of $6 and is having a downward glance.
Perhaps after todays dampening announcement by BHP on Iron Oar demand!! it's going to reverse.
With all that wonderful debt that's had the market so excited about it recently, it would make sense that it may catch down to it's less indebted friends to me?

 

[tinhat]

FMG is appearing to look a little afraid of $6 and is having a downward glance.
Perhaps after todays dampening announcement by BHP on Iron Oar demand!! it's going to reverse.
With all that wonderful debt that's had the market so excited about it recently, it would make sense that it may catch down to it's less indebted friends to me?

$6.05 is the 61.8% retracement to the Jan 2011 high. I would not be surprised to see a pull-back to somewhere around $5.65 which s the 50% retracement to the Jan 2011 high. $5.60 is also the 52 week moving average price.

My charts are saying buy, so I just went longer buying a parcel last week at $5.95. $7.36 is the Jan 2011 high. $7.17 is the 50% retracement to the June 2008 all time high. I'm targeting $7 for the current bull cycle.

 

[notting]

Notice that FMG went up today?

Yeah, rallied yesterday on the story that they are mulling an IPO in Shanghai or HK for magnetite ore assets Couldn't believe it finished on it's high too!!
After today you could argue it is consolidating above it's break out above 6 which would be technically appropriate, but not me!!
I think you pointing out it's due for a replacement was insightful.
I'm sure you weren't one of the idiots buying yesterday!!
I was so shocked it was up yesterday that I couldn't help myself and put a fat short on it!

 

[Garpal Gumnut]

Just an update on FMG.

It is climbing like a turtle, increasing volume on the up moves, and decreasing on the down.

I have moved my stop up to $5.80 and still maintain a target of $7.

gg

 

[notting]

The technical concern that is disturbing about the iron ore miners is the posturing that BHP is showing (not confirmed as yet), even with it's diversification and oil interests which has been booming recently.

The fundamental thing is that in the past the markets have over reacted, on many occasions, to slightly weak data coming from China. This has been easy to dismiss because it's just a factory to the world and so what is going on in the world is more relevant. The commodity prices would have a bit of a dip and then quickly return to growth.

However, this time the figures out of China pointed to lower demand, not lower ore prices. The answers from the big miners, in the past, has always been we can crank up production to cover lower prices basically because there is so much demand from China!

FMG is cranking up production for sure, however, if demand is falling off, the cranking up production to offset margin loss, is not going to cut it and in that environment it's going to be hard to compete with the big three for survival let alone profit even if the prices remain relatively strong at the 120 mark which is hard to imagine with slowing demand!

At present the hope is that the US economy is so strong that production for exported goods will outstrip the slower infrastructure and housing, government manipulated, fake boom in China - ghost cities of badly built buildings!! The US recovery has to be so strong that it will make up for a European recession as well as slow down and likely collapse of the fake boom in China!

Has there ever been a time in recent history when the breaks are still reportedly being applied in China whilst imports have exceeded exports?

The breaks are not being applied, all that's happened is that the dictators can no longer gorge on the peoples labor and turn the profits into housing and infrastructure that the majority of the population can not afford by a long shot!! So now the dictators are trying to look like they are slowing it down in a controlled manner! Crap, it is slowing rapidly due to natural forces that are finally coming to bear! - Inflation that was starting to spiral out of control and people unable to eat!

The reason the Chinese have allowed their dollar to rise recently has nothing to do with putting a stop to their strategy of destroying manufacturing in the rest of the world, it's been because they had to try and address some of the inflation i.e. so it can import oil, coal, ore and food at more affordable prices.

Now that imports are exceeding exports China has no where to go.
They may choose to spend some of their so called vast reserves (that are diminishing against the rising Yuan) to keep the boat afloat for a little longer, however the dictators see that as their money and have always been reticent to spend too much of it unless social unrest would threaten their grip on the people!!

The question for our Iron Ore exporters is this - Is the US recovery so strong that it will make up for a cessation of the housing and infrastructure boom in China and a recession in Euro land?!

The markets may continue to boom along with more optimism in the US as manufacturing recovers due to a less competitive China, but even that doesn't help our miners if the majority of their exports were being consumed in the fake housing and infrastructure boom that happened in China!!

Markets can overshoot and there could be some more technical legs in the ore miners yet, however I feel the risk is to the downside and raising stops is a prudent step!!

So all eyes on BHP as it looks to attempt to break through it's downside resistance at around 33.70 ish as a broad indicator for timing!!

 

[Garpal Gumnut]

FMG is a concern for me. It has shown a 50% profit from the lows at $4 in October last year to a recent $6 price.

Price action has fallen recently and has been on falling volume.

I am planning to exit if the sp falls below 5.78 next week.

The amount of steam it needs to get through the resistance area in the rectangle between $6 and $7 just seems too much for this stock at present. The recent attempt faltered at 26m and 20m shares, on 21/3 and 22/3 and volume has dropped since as has price.

If volume and price increase on Tuesday, I'll stay in.

gg

 

[TrendGAIN]

Good call Garpal. OBV has been falling with rising prices - usually a divergence signalling weakness. The brokers still like it with about 20% to its consensus target ($7.06) - but my trend indicator has it slowing or stopping. Did you get out or are you still riding it?

 

[Garpal Gumnut]

Good call Garpal. OBV has been falling with rising prices - usually a divergence signalling weakness. The brokers still like it with about 20% to its consensus target ($7.06) - but my trend indicator has it slowing or stopping. Did you get out or are you still riding it?

Thanks trendG, I got out at $5.77 last week.

It's starting to look interesting again though.

I'll post a chart on the weekend. Good trading.

gg

 

[Tyler Durden]

Relevant:

PROMINENT hedge fund manager and short-seller Jim Chanos has singled out Fortescue Metals as a ''value trap'' stock, telling a New York conference that shares in billionaire Andrew Forrest's company will fall ''materially''.

In a presentation this month to Grant's Spring Conference, a private investment forum, Mr Chanos, the boss of Kynikos Associates, told investors he feared iron ore miner Fortescue has ''a somewhat promotional management team''.

He singled out the company as the global example of a ''value trap'' in the ''iron ore rush'', adding that he is betting against the company.

''In our hedge fund, we are long BHP vs Fortescue and others,'' Mr Chanos said, according to an account of his presentation in Grant's Interest Rate Observer, the publication of the conference organisers.

''BHP is a much more stable company. They see the cycle more than others do, they've been through it more than others have and it's been an interesting hedge for those that play it that way.''

Mr Chanos exposed Enron as a fraud and famously bet against Macquarie in 2007, saying the bank's model could not last.

''Fortescue, however, is full steam ahead. In our opinion, they have a somewhat promotional management team.

''It's got about $2.8 billion in EBITDA (earnings before interest, tax, depreciation and amortisation) but it's got a capex (capital expenditure) program last year of $1.5 billion, and it's going up.

''Increasingly, with any kind of reversion to the mean of iron ore prices to $US100 per tonne or less, we're going to see a dramatically lower ability to service the debt and to service the capital programs they have. And a stock price materially lower than it is today.''

http://www.smh.com.au/business/renowned-shortseller-bets-against-fortescue-20120426-1xo0r.html

 

[Garpal Gumnut]

Relevant:



http://www.smh.com.au/business/renowned-shortseller-bets-against-fortescue-20120426-1xo0r.html

Thanks Tyler,

Useful information, it looks as if FMG may be rolling over to the downside.

FMG is becoming quite a good trading stock.

gg

 

[nulla nulla]

Relevant:



http://www.smh.com.au/business/renowned-shortseller-bets-against-fortescue-20120426-1xo0r.html

Interesting article. When I saw it I noticed that they didn't give any indication as to what they thought it was worth. When you consider that FMG is still a long way off its' pre gfc highs it is interesting to see that a "renowned short seller" has singled fmg out and the reasons given are fairly light weight (imo).

All things considered if the "international-renowned-shortseller" was to push the price down I would be looking to take a position. IMO fmg still has plenty of upside.

 

[Garpal Gumnut]

Interesting article. When I saw it I noticed that they didn't give any indication as to what they thought it was worth. When you consider that FMG is still a long way off its' pre gfc highs it is interesting to see that a "renowned short seller" has singled fmg out and the reasons given are fairly light weight (imo).

All things considered if the "international-renowned-shortseller" was to push the price down I would be looking to take a position. IMO fmg still has plenty of upside.

Just looking at the charts above, anything under $4.50 would bring strong buying, should it be sold down.

I'll sit it out at present.

gg

 

[tinhat]

Thanks Tyler,

Useful information, it looks as if FMG may be rolling over to the downside.

FMG is becoming quite a good trading stock.

gg

Yep, I believe it is at a pivot point right now around the $5.60-$5.65 range. Note that it bounced off a higher low of $5.68 a couple of weeks ago.

 

[tinhat]

FMG seems to be hovering around 5.60. Weakness not helped by the high prospect that diesel rebates for miners will be going in the budget.