Email of the day (2)
Comment of the Day

August 31 2012

Commentary by Eoin Treacy

Email of the day (2)

on industrial metal miners:
“Do you consider the completed head-and-shoulders on Anglo American to be significant or not? (BHP Billiton might also not be far behind)”

Eoin Treacy's view Anglo American has been particularly weak not least because of the large proportion of its business that depends on platinum, palladium and coal. The share sustained the breakdown from the two-year congestion area in June and extended the downtrend from July. A sustained move back above 2000p is the minimum requirement to question downtrend consistency. While Anglo American's weakness is noteworthy, the share has not been a sector leader. I would consider similar weakness by either BHP Billiton or Rio Tinto to be of greater importance.

Rio Tinto is currently testing the lower side of a similarly lengthy range and a clear upward dynamic will be required to suggest a return of demand dominance in this area.

BHP Billiton encountered resistance last week in the region of 2000p. Provided the progression of higher reaction lows from the May nadir remains intact, the benefit of the doubt can continue to be given to higher to lateral ranging.

On a day when the Fed chairman showcased his arsenal of unconventional monetary policy tools without saying when he would use them, it is noteworthy that we received emails expressing anxiety about China, the Australian Dollar and the industrial mining complex. During such a taut market environment it would do well to stick to the technical facts. The majority of stock markets have posted progressions of higher reaction lows over the last three months. A break in these sequences is the minimum requirement to lend credibility to the bearish case.

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