FMG - Fortescue Ltd

[Ozland]

I will look for either extremelly high volume to come in late today, or a pullback and consolidation around $8.50 before we get a solid run.

I think volume at end of trade today was around 8 and a half million: does this constitute "extremely high volume"?

It seems to be for this share, at least in relative terms.

I would love some advice on this so I can learn to read the market a little better.

 

[michael_selway]

I think volume at end of trade today was around 8 and a half million: does this constitute "extremely high volume"?

It seems to be for this share, at least in relative terms.

I would love some advice on this so I can learn to read the market a little better.

HI looks good today

Earnings and Dividends Forecast (cents per share)
2007 2008 2009 2010
EPS -2.6 -3.0 31.2 82.3
DPS 0.0 0.0 0.0 0.0

Date: 7/5/2008
Author: Jamie Freed
Source: The Sydney Morning Herald --- Page: 21
Australian iron ore mining upstart Fortescue Metals Group (FMG) on 6 May 2008reached its most important milestone yet. It began loading ore onto a vesseldocked at the new port facility servicing its mine in the Pilbara region ofWestern Australia. The $A4bn development is breaking the virtual duopoly helduntil now by major listed companies BHP Billiton and Rio Tinto, and is seen aslikely to encourage other small mining entities to also become active. Amongthese are Aquila Resources and Atlas Iron. Groups such as these will be able tostrike infrastructure sharing agreements with FMG, while Rio and BHP havecategorically ruled out any deals

Date: 6/5/2008
Author: Kevin Andrusiak
Source: The Australian --- Page: 20
The resources sector lobby group, the Minerals Council of Australia (MCA), hastaken sides in a competition matter. In a submission to the National CompetitionCouncil (NCC), the MCA argued that iron ore start-up Fortescue Metals Groupshould not be granted its wish to access rail infrastructure by dominant rivalsBHP Billiton and Rio Tinto. The partisan stance has been attacked by Fortescue,which is also celebrating a court win against Rio over the latter's appealagainst a ruling by the NCC. Fortescue says it is backed by Part IIIA of theTrade Practices Act. Meanwhile it has set another milestone by having the firstvessel sail into its new port, to be loaded with ore from its mine in thePilbara region of Western Australia

Date: 1/5/2008
Author: Michael Vaughan; Jo Clarke
Source: The Australian Financial Review --- Page: 17
Small iron ore exploration companies are increasing pressure for open railaccess in the Pilbara in Western Australia. Fortescue Metals Group is trying togain access to the rail networks of BHP Billiton and Rio Tinto. Fortescue'scase has been supported by submissions to the National Competition Council bythe Association of Mining & Exploration Companies, North West Iron OreAlliance and Atlas Iron. BHP may become more amenable to sharing infrastructureas it could help to satisfy European regulators considering its takeover bid forRio

thx

MS

 

[MRC & Co]

I think volume at end of trade today was around 8 and a half million: does this constitute "extremely high volume"?

It seems to be for this share, at least in relative terms.

I would love some advice on this so I can learn to read the market a little better.

Sorry Ozland, my words were not meant to be so exact and decisive.

While many look at "extreme" volume in comparison to "high volume", as per Tradeguider (a software program teaching Volume Spread Analysis), I do not take notice of such differences for now. Just another way I try and keep it as simple as I can.

Yes, I would say volume looks promising, though would have liked to see it a bit higher.

I actually took the trade and sold later in the day. I just think there will be a consolidation at this high shortly (perhaps a high tight flag, depending if that gap gets closed or not), though if there is not, I miss the boat and so be it.

The recent iron ore news following on so close after the coking coal negotiations, is sure to get some excited!

I agree with Michael though, projections look fantastic!

Cheers

 

[Nick Radge]

Something is better than nothing, and I may as well stick to my target. Thanks for the advice. My mates dad is striking it massively rich at the moment. This stock has made him a millionaire just by chance. Who would have the balls and the money for that matter, to throw away a couple of grand on a penny stock only to see it turn a thousand times over!

This is off topic so maybe it should be posted elsewhere.

Goose,
read your comment above and then think about your dilemma.

Do you see your contradiction?

Your Dad's mate is making it rich because he didn't sell.

You want to sell because the money is important to you. Remove that emotional bias and concentrate on what the market is telling you and you'll have your answer.

I'll make two bottom line comments:

(1) I strongly disagree with the concept that you'll never lose taking a profit. Totally and utterly the wrong way to trade.
(2) You'll never make a big profit by taking small profits. Your Dad's mate shows you that. What if he had sold at $1?

Disclosure: I hold FMG and will get the heck out when the market tells me to.


This post may contain advice that has been prepared by Reef Capital Coaching ABN 24 092 309 978 (“RCC”) and is general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice you should therefore consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision.

 

[Prospector]

(1) I strongly disagree with the concept that you'll never lose taking a profit. Totally and utterly the wrong way to trade.
(2) You'll never make a big profit by taking small profits. Your Dad's mate shows you that. What if he had sold at $1?

Nick, I can give you many instances where that philosophy has saved my butt and my profit. You say you will sell when the market tells you to, but what happens if you miss 'the telling'; or if overnight, something happens left field. My worst ever fall was MFS; overnight the price vanished. I should have taken profit even just the week before, instead took a significant loss.

This poster is a Newbie; he hasn't traded much; he has to protect his capital in a manner that allows him to sleep at night; he is learning (as we all are) as he goes. He has made a profit, he has asked a "newbie" question and clearly has not learnt much about TA and trading; he could very likely, miss the trigger to sell and lose not just the profit, but the capital.

OK, so his dad's mate has made a profit this week. Maybe the ship gets to China and the ore ain't good enough. Kaboom! And that could happen overnight before he gets the chance (or has the knowledge) to sell in time. Until you sell, it is ALL PAPER PROFIT!

I hold, but am realistic to say that I watch FMG very very carefully; and at the first sign of weakness, I offload for profit. And then buy in again. Maybe I dont make the mega dollars, but last night I worked out that instead of being in the red this financial year, like most, if not all Super Funds, I am actually in positive territory. Wrong? Nope.

 

[Miner]

Nick, I can give you many instances where that philosophy has saved my butt and my profit. You say you will sell when the market tells you to, but what happens if you miss 'the telling'; or if overnight, something happens left field. My worst ever fall was MFS; overnight the price vanished. I should have taken profit even just the week before, instead took a significant loss.

This poster is a Newbie; he hasn't traded much; he has to protect his capital in a manner that allows him to sleep at night; he is learning (as we all are) as he goes. He has made a profit, he has asked a "newbie" question and clearly has not learnt much about TA and trading; he could very likely, miss the trigger to sell and lose not just the profit, but the capital.

OK, so his dad's mate has made a profit this week. Maybe the ship gets to China and the ore ain't good enough. Kaboom! And that could happen overnight before he gets the chance (or has the knowledge) to sell in time. Until you sell, it is ALL PAPER PROFIT!

I hold, but am realistic to say that I watch FMG very very carefully; and at the first sign of weakness, I offload for profit. And then buy in again. Maybe I dont make the mega dollars, but last night I worked out that instead of being in the red this financial year, like most, if not all Super Funds, I am actually in positive territory. Wrong? Nope.

Good posting FAB.
Very positive and encouraging for newbies like me.
This forum is an excellent mix of newbies, verterans, and not so veterans. The amount of information posted here with a bit of filtering really highly educative (for me at least).
Please keep it up

Regards

 

[MichaelD]

...but what happens if you miss 'the telling'; or if overnight, something happens left field. My worst ever fall was MFS; overnight the price vanished. I should have taken profit even just the week before, instead took a significant loss.

1. MFS was SCREAMING "SELL ME SELL ME" for a week before its price was decimated.

2. If you keep taking small profits off the table before they have the chance to build into big profits, you GUARANTEE that the occasional big loss like MFS will wipe you out.


You absolutely can, do and WILL GO BROKE taking small profits. It's a mathematical inevitability.

Sure in the short term it looks good - lots of wins, a steadily increasing equity curve, but then... WHAM, the losses come home to haunt you. (They're the trades you've hidden in your bottom drawer and are steadfastly ignoring hoping they'll come good.)

Disclosure: I hold FMG and will get the heck out when the market tells me to.

I'm sure I remember this one getting the EW "kiss of death" a while back...? (Just after I'd finished fully pyramiding it, if I recall .) I presume therefore that you are now long FMG, not short.

 

[MRC & Co]

One simple method to exit for the newb who has no idea about T/A, is exit once the current days bar closes (just before close) below the low of the previous two days lows (whichever is lower). (Vice-versa for shorts).

That being said, learning support/resistance takes about 10 minutes, it is not a complex concept, so there is no real excuse not to understand it.

Out of interest Nick, which pattern did you use to enter this trade? (long I guess also).

 

[Prospector]

You absolutely can, do and WILL GO BROKE taking small profits. It's a mathematical inevitability.

Sure in the short term it looks good - lots of wins, a steadily increasing equity curve, but then... WHAM, the losses come home to haunt you.

Sorry, but I think some of your 'certainties' are just rubbish! I have been doing this for 7 years now, with around 10 - 30% profit pa; is that short term and when exactly will it all come unstuck?

MFS had dipped in years previously (I had been trading it back in the days when it was BRK!) but had always regained strongly; the week previous was really no different from its pattern of say, three years when it was tracking down again. But then the Directors were involved in some shonky stuff which should be illegal (ie using the shares they had in a Company in which they were Directors, and which were sold off in a margin call) and that day, disaster! That was what caused the downfall; that was not in the trades of the week before, and that is why the company was put into halt. It was not the week before that did but the actions of the Directors.

Maybe it is a case of sticking with my plan, and you can stick with yours. And maybe you should also give my accountant the same warning because he asks me what I am doing with the trades because I am one of his "gold stars" in terms of returns and good sells.

 

[stad]

Again, this is off Topic.

The previous 5 messages has explained something that I haven't seen put so plainly before.

I thank you all very much.

 

[MichaelD]

Really off topic...but I'm not having a go at anyone here. Don't take it personally.

Maybe these few posts could be moved to a new thread as there's much to think about.

Sorry, but I think some of your 'certainties' are just rubbish! I have been doing this for 7 years now, with around 10 - 30% profit pa; is that short term and when exactly will it all come unstuck?

This return is in a market where a middle of the road trend following system has gone from $100K to $450K and where the index has doubled. Still, in all seriousness - WELL DONE on your returns. If you're able to consistently take that sort of return out of the markets year in year out, you are in the considerable minority.

MFS had dipped in years previously (I had been trading it back in the days when it was BRK!) but had always regained strongly; the week previous was really no different from its pattern of say, three years when it was tracking down again.

Any trailing stop put on MFS would have signalled an exit over and over again in the days before the big fall. Price was signalling there was something very wrong going on.

Having said that, it is also quite feasible that previous retracements which you rode out would also have gotten technical traders whipsawing in and out of a position in MFS - I no longer have the chart to be able to plot a trailing stop on it to see what it would show me.

Technical traders using stops OFTEN get out of perfectly good positions which then rebound and continue going skywards. We just get back in if a re-entry is signalled.

The idea is that we are OUT when the sky REALLY falls, and that more than makes up for the inconvenience of being whipsawed in and out.

Maybe it is a case of sticking with my plan, and you can stick with yours. And maybe you should also give my accountant the same warning because he asks me what I am doing with the trades because I am one of his "gold stars" in terms of returns and good sells.

Indeed so - my plan suits me well.

btw, have you never wondered about the implications of what your accountant is actually saying in regards to your trading - your returns are clearly superior to the majority of traders he is aware of - in a screaming bull market for the last 4 years that says a lot about the ability of people to stuff up during even the greatest bull market in history.

Maybe if you held onto some winners a bit longer and cut some losers a bit earlier you might have made even more money...?

 

[The Barbarian Investor]

A friend takes his profits at 10% and cuts his losses at around 5 to 6%, his thoughts are he has more stocks that go up from 0-10% than 10% -25%, he also keeps a very small stable of stocks and has been known to buy in and out of the same one many times over

Once it hits around 10% + thats his magic mark, he doesn't set a stop-loss below that as he wont make his 10%+

 

[Prospector]

Maybe if you held onto some winners a bit longer and cut some losers a bit earlier you might have made even more money...?

Yep, on that I will agree totally! And FMG is one of those. If I had not taken profits along the way, I would have made some serious, serious money. The nature of the SMSF in which I have most money will not allow too much% to be tied up in 'spec' stocks, so in some sense, because FMG had risen so well, it was well over double my next share holding, so I had to sell some anyway. Am looking at over $80k profit on FMG on a small holding, so cant complain at all. But it could have been more than that. But still, $80k is $80k. Which was my point prior to Nick's psot - a profit is a profit.

I also agree that if you get out potentially 'before the top' based on TA (market indicators), then you are certainly well out if it tanks. In effect we are saying the same thing, although mine is based on profit (and sleeping at night) wheras yours is more TA based, although I do not sell, even if on a great profit, if the market signals are still strong. Which is what mainly happens with FMG, hence I have held consistently now for a few months.

Goose's query was about FMG. At this stage, FMG must still be considered a speccy stock, and it might be a bonanza for him (and even more so for me) so the normal TA for FMG does not apply until it is proven that the ore they are shipping meets Chinese expectations. And therein lies the risk.

I think overall, we are both saying that you might end up selling before the top, and buying before the bottom. And profit is profit.

 

[Miner]

(If India cuts down the steel price so significantly and they have a vast iron ore resources means Indian Steel will very competitively priced. Wil it provide ripple effect on steel prices and hence iron ore prices in near future. There would be changes in Chinese demand after olympic)
Not relevant posting but there is no such posting on steel vs iron ore etc and FMG being a most popular iron ore it has strong connection with steel. Sorry folks for out of the way posting here)

Steel makers agree to cut prices
8 May 2008, 0117 hrs IST,TNN
Print Save EMail Write to Editor (from Indian Press)

NEW DELHI: In a meeting with PM Manmohan Singh on Wednesday, steel manufacturers decided to reduce prices of flat products by Rs 4,000 per tonne and of rebars and structural steel by Rs 2,000, for next three months.

“We endorse the government's concern over steel prices contributing to inflation,” SAIL chairman Sushil Kumar Roongta said.

The reduction in flat steel prices will be done by those producers, who have increased prices in April. Almost all the companies except SAIL had increased prices in April. Price of downstream products will also be cut, even if their prices were not increased in the last two months.

The price reduction would not be applicable for long-term contracts, where prices were fixed before March 31, 2008, due to contractual obligation. The reduced prices will only be applicable for the steel that gets consumed in India - either directly or after processing.

The current price of flat products is around Rs 45,000 per tonne. The reduction will lead to a 10% price cut.
A delegation of steel captains met Singh and apprised him of the problems being faced by the industry. The chiefs argued that the industry was forced to increase prices as input costs have gone up substantially since January 2008. They told PM that due to unprecedented rise in prices of iron ores and coking coal, the production costs in the last four months have gone up by Rs 8,000 per tonne to Rs 14,000 per tonne. And, a price increase by Rs 4,000 per tonne in April has not even covered the rise in input cost.

In a statement, Tata Steel said notwithstanding the adverse pricing situation, the steel industry took the price-cut measures to support the government's endeavour to check inflation.
FM P Chidambaram, steel minister Ram Vilas Paswan and cabinet secretary K M Chandrasekhar were also present in the meeting.

After agreeing to reduce prices, steel makers urged government not to impose export duty on steel, to roll back increase in price of iron ore by 47% in 2008 by government-owned National Mineral Development Corporation and to maintain the price of coking coal by Coal India at 2007 level. The industry also demanded relaxation in ceiling on external commercial borrowings for executing expansion plans and getting rid of high cost debts.

Ispat Industries V-C and MD Vinod Mittal said the government has assured them that the notification for implementing the export duty on steel will be put on hold.

While replying to the debate on the Finance Bill in Parliament last week, Chidambaram had announced up to 15% duty on steel exports to increase domestic supply of steel, to check the price of the metal, as it is seen as a major contributor to inflation.

 

[Prospector]

If India cuts down the steel price so significantly and they have a vast iron ore resources means Indian Steel will very competitively priced. Wil it provide ripple effect on steel prices and hence iron ore prices in near future. There would be changes in Chinese demand after olympic)

And this is the kind of stuff that happens unpredictably, left field, overnight, and is not reflected in TA analysis from the close of ASX trade.

Profit is profit, but a paper profit doesn't count!

 

[Ozland]

Sorry Ozland, my words were not meant to be so exact and decisive.

No worries. I appreciate any feedback!

I actually took the trade and sold later in the day. I just think there will be a consolidation at this high shortly (perhaps a high tight flag, depending if that gap gets closed or not), though if there is not, I miss the boat and so be it.

High tight flag? .......ahhh, a technical analysis term (just googled it ). Can someone show me what a 'high tight flag' looks like? It seems to be a useful indicator. Thanks.

I have been thinking over the last few days, after hours of research into FMG and the commodities sector in general, that FMG will not fall back below $9.00 (perhaps a few cents for a couple of days at worst) because FMG has a big ace to play in the next few days: a MILESTONE!!! First genuine commercial shipment: not a 'token' shipment. Barring equipment failure I can't see anything spoiling the party.

Regarding some comments others have made in this thread regarding possible rejection of the ore due to quality: it won't happen! The success of this shipment will be celebrated in China too as they are (literally) banking on FMG's success as leverage against BHP/RIO! The Chinese government will ensure that rejection of the ore due to quality does not happen.

This scenario is gold for a company at this point in its development. Great PR opportunity and while it may not dazzle the professionals, it will certainly impress your average investors (like me)!

I agree with Michael though, projections look fantastic!

Cheers

Damn! So the time honoured question remains unanswered.... "...should I stay or should I go?" (hold or sell...that is the question!)

Cheers, and thanks for your comments, MRC and Michael.

 

[2020hindsight]

I'm holding for a bit longer yet. FMG busy building an extension to their wharf as we speak - with another extension to follow. To say nothing of stockpiling options into the future. Not sure about TA, but I do know that steel is getting much harder to find (and more expensive) around here these days.

The idea that the end of the olympics will cause the bubble to burst ? Or that China will somehow be made to set their dollar at a more sensible level? etc - Can't comment - I'd be guessing. But I'm certainly holding for a bit longer yet. (PS this entire game is a gamble if you ask me).

 

[MRC & Co]

Ozland,

http://thepatternsite.com/htf.html

I cannot give advice whether to sell or not, but if I were in the trade, I would not sell and have my stop placed around 8.50, this holds strong support due to the closing of the gap and the old high.

Cheers

 

[zaf39]

New to this forum,
been day trading for approx. 3 years, if u look at the past charts of alot of the miners you could easily see that FMG could easily hit $14,i hope my past experience of not taking profits i.e rio is not the same pattern i will have again but hoping i get it right this time

 

[njc.corp]

New to this forum,
been day trading for approx. 3 years, if u look at the past charts of alot of the miners you could easily see that FMG could easily hit $14,i hope my past experience of not taking profits i.e rio is not the same pattern i will have again but hoping i get it right this time

Zaf-i been trading for about 3 months(early days) but i have some rules that i came up and stick to-one of them was regarding chart's

anyone can quote me if i am wrong-but the charts are whats happen in the past and why its happen-and everyday is a new making of a chart for a reason-

so my ? to u is why do think fmg could hit $14.00? i mean what part of the chart is indicating a up to make or hope of a price rise-

Thanks

Nick--