nulla nulla
Positive Expectancy
- Joined
- 24 September 2008
- Posts
- 3,588
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- 133
Thank you for all the responses. I have taken a couple of parcels and am prepared to ride out the storm.....for now.
Let me put it this way.
'Clear and present danger': Australia to be hit as Chinese economy starts unravelling
Read more: http://www.smh.com.au/business/chin...nravelling-20140905-10cs4j.html#ixzz3CPzLZ8ia
Yep...after China was falling for more than 5 years now, everybody seems to be very good for projecting further price falls on everything. What is even more interesting, they say that " downturn is about to happen soon" , as if the china was rising in the past years.... Doom and Gloom at the bottom, this is classic. Analysts are especially attracted to this kind of behaviour as herding impulses tells them that it is dangerous to say and analyse anything that is not in line with a trend...
Dude this is a stock forum.
I have been calling China down for 6 years and that's exactly what has happened.
It's irrelevant what the lying corrupt Chinese dictator thieves say about Chinese growth and miraculous bullsh$t economy and so forth.
Where else have you seen a so called economy expand at between 8 and 10 percent for 5 years whilst the stock market does a 5 year run in one direction - DOWN!!!
Hmmm.......at $3.58 close ($3.50 inter-day low) I think that light at the top of the shaft went out. A question for the TA and chartist experts, is this the capitulation stage?
View attachment 59521
I noticed an article in todays paper that China thinks the miners are over estimating the future demand for steel. More cold water for the iron ore producers or brinkmanship to keep iron ore prices down?
Hmmm.......at $3.58 close ($3.50 inter-day low) I think that light at the top of the shaft went out. A question for the TA and chartist experts, is this the capitulation stage?
View attachment 59521
Hi Nulla Nulla,
It really depends on your investment time frame. If you're a trader that wants to get in and out quickly then yesterdays low may be a punt but that's all it is because your chart just looks deadly. Not pretty at all and not something you'd want to be putting much cash on that you weren't wanting to part with in the short term.
For any meaningful analysis it really helps to zoom out and look at the weekly chart. Short term daily charts are more for traders with a view of no more then a few weeks.
View attachment 59524
I have been watching FMG for a long time but it is not a stock that gives clear technical areas of support and resistance. I feel like I forced these lines on because the areas of support and resistance were not clear until I drew the lines in (something that I've learned does not suit my own risk tolerance but that's another story...).
As to your question, I don't see any cause for REAL capitulation until another 50% reduction of the share price and even more. There is a real possibility, that if the stock sees some very strong pressure, that it could test the 2008 low and create a new low, which is where REAL capitulation happens. Call it insane, call it ridiculous and impossible but i've seen this happen many times before.
That's a longer time frame however. In the short term, odds are it will bounce around these levels between here and $2.50. That's exactly what I don't like about FMG. It's levels of support and resistance have very wide margins, meaning that the stock regularly goes passed them by 5-10% before turning around, sharply.
Scaling in to stocks like this is the only way to reduce the pain as they are going down, if you are an investor for the longer term and you are confident in the future of the business. I have added my own lines and amounts that I'd be comfortable chucking in BUT even though we are using technical analysis here, this is still a punters game. You are only putting on an amount that you are willing to lose.
When REAL capitulation hits, it's unquestionable. You'll know. NCM is an interesting one to watch over the next few months .
Hope that helps someone.
(The chart and and information posted is purely my own opinion and should not be taken as advice. I am not licensed to give advice. You make your own decisions at your own risk)
As of last week, FMG has become my second largest holding, making up 25% of my portfolio.
I couldn't resist loading up at current levels, by my calculations even on the current low iron price and reduced profit margin they still represent very good value, and if the iron price creeps up over the next year and their profit margins increase to where they can clear $20 of more profit a tonne, I can see them being worth significantly more than they are now, at the moment I see them as having the biggest profit potential in my portfolio.
The biggest risk off course is the iron price, if it hovers at current levels, we should do ok, if it rises to say $85 over the next 12months, we should do brilliantly, if it sits less than $60 for a prolonged period, we may be in trouble though.
So there is so risk to my position, but I am pretty confident the iron ore price will stabilise in a region where FMG can make sustainable margins, and if it does, the current price represents great value.
Happy to patiently hold this one.
Wow.....nerves of....well...steel
We all have our opinions, and when you feel your right you have to back yourself, no point being right if you don't have a position, or only have a token position............
Yet when compared with the like of BCI which has little debt and produces at a similar cost, FMG could go below a dollar with all it's debt, it could even go under if IO does not recover
Fmg could sell the infrastructure to an infrastructure company, clear their debt and still be in a better position than Bci.
Dude! You don't really believe that.
For a start if the current price is the new normal then there would be no one wanting to buy 8 billion dollars of infrastructure and move it to God knows where for God knows how much and re set it up. Move the railway lines too.
Nope. You don't think so.
Further, no one would pay the amount needed to cover FMGs debt, for it, even if it could be relocated economically.
Well all that isn't worth much if the mine is running at a loss, no one in their right mind would buy it. You can't run at a loss for 100 years and the mine would never be 'active' for 100 years regardless of any scenario 25 at best.
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