The Big Boys, page-451

RIO:

Vindin, no. An accelerating downtrend on the monthly chart. You don’t want to stand in front of that freight-train trying to pick the bottom.

Although I don’t normally analyse RIO, the 25%ATH level of $31.05 looks the most likely first target. This is also a strong support level. So I wouldn’t get interested until it reached there, and then see if a bottom is forming. It could run past that level though, but this is just a quick review. $31 is also where it was at in 2004 when the commodities boom took off, which is now being unwound.

Regardless of targets, there needs to be some evidence of basing and turn-around before I would enter such a stock, even you miss the bottom. We don’t have that yet. With the current state of the iron ore market, any new uptrend will be slow and grinding so you don’t want to start out with a drop in price and trying to recover. You’re unlikely to get a big V-shaped bounce in an iron ore stock at the end of a commodity cycle. Best to place your money elsewhere until you see this has clearly turned.

Note that I’m not ruling out a big counter-trend at some point in RIO that could be a decent trading bounce, in fact this is likely. It’s at a reasonable support level now for example, so could also bounce up for a few weeks from here. But any bounce from above $31 won’t necessarily be a final bottom and is more likely a shorting opportunity. Given you referenced Madamswer I assume you’re looking at a long-term investment position.

Note that my target bottom in BHP is $11.30.

Madamswer is the best fundamental analysis on Hot Copper, but he seems to be a value investor so I expect even he would admit he doesn’t time markets.

He’s too early on RIO.