Charts - mining

A couple of days ago I asked if anybody was interested in charts and didn’t get much response. However, I thought I would share some charts today having spent a lot of the weekend doing technical analysis on lots of charts. None of the posts are intended to be buy/sell/hold recommendations or any advice. I am posting for fun and to try to stimulate some discussion. I am happy to discuss the charts but the charts I’m posting are rather simple because I use a lot of different indicators and have scripts that run over the data to provide signals and analysis so it would be difficult to post all of that. Also T212 charts don’t always go back as far as some of the lines that I am drawing are derived from.

Some of the mining stocks pay very good dividends which can distort the charts sometimes so some of the lines are clearer (in terms of the points that connect them) when the charts are viewed adjusted for dividends.

Clearly the large dividends from some of the mining companies make them very attractive.

AAL is sitting on historical a SR level. There are a few ways to interpret the recent chart. The recent upward channel could either be an upward channel or a bearish flag from which the price has dropped out of (as a bearish flag would predict). The current price is at a strong historic SR level so it will be interesting to see how the price develops now. I have my own view but time will tell.

BHP - the chart is a little complicated. The white SR line comes from historical points and is a strong support line. The price was in a fairly strong upward trend and fairly telling how the price moved between the upper and lower halves of that upward channel. There are multiple ways to interpret the triangle that has formed since the price dropped out of the upward channel. It has an SR level at the current share price and a strong SR level (white line) but broke the rising yellow dashed line (which is derived from some historical points not just those shown in the screenshot).

HBR - It broke through a downward SR line (yellow line) only to fall back to that line. It has now broken above the line again with indicators at oversold and is sitting between different MA lines. The biggest factor suppressing HBR’s price is the Government’s windfall tax which I guess is unlikely to change soon but HBR is now looking to opportunities abroad and if/when the windfall tax is reduced it could have a big affect on HBR.

RIO - many of the comments about the other miners apply to the RIO chart. There is potentially a new method of lithium extraction (that can be used for lithium brine) that could significant boost RIO.

I also think Breedon (BREE) is worth a mention. It isn’t the most sexy stock but doesn’t have much risk to the business. It is moving from AIM to the main market this month and is a highly cash generative company paying a good dividend. However, it isn’t a mining company like the others and doesn’t mine oil or minerals. It just digs up stone and sells it (plus cement business). The market reacted recently to revenues dropping but although revenues dropped (I think by about 10%) BREE increased prices (I think by about 20%) so the overall effect was positive on profits. Arguably the recent downward share price could be a bullish flag and the indicators are now oversold and turning positive. There’s a lot going on in the chart which isn’t reflected in the simple SR lines I’ve drawn.

Could you link the new Li mining method regarding Rio?

Rio seems very late for the Li hypetrain. Also TA suggests more down side imo.
And more banking crisis and economic weakness in China good pose major headwind for Rio I think

This was on the Dow Jones Newswire:

" Direct Lithium Extraction Technologies Could Be a Game Changer – Market Talk

Apr 28, 202305:52 GMT+1

0452 GMT - The use of direct lithium extraction technologies could be a game changer for the lithium industry, similar to how shale transformed the oil industry, Goldman Sachs analysts say in a note. A number of proven direct lithium-extraction technologies are emerging and being tested at scale. Their implementation “has the potential to significantly increase the supply of lithium from brine projects, nearly doubling lithium production/yield (taking recoveries from 40-60% to 70-90%+) and improving project returns,” say the analysts. The technologies also have ESG benefits–with land area needs and water usage much lower–while also widening, rather than steepening, the lithium cost curve, the analysts say. As a result, the GS analysts “prefer briners over miners,” and reiterate buy ratings on Allkem and Rio Tinto. (; @RhiannonHoyle)

(END) Dow Jones Newswires

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Your charts look very pretty, but are they not lacking a little in clarity - there are no X/Y axis guides for example.

Anyhow on mining, my view is that the global resources sector in general is very cyclic, and can be difficult to generate consistent returns.

GGP might be a good one to analyse - its quite popular but its price swings can be a little wild and there has been a large variance of risk as a result in the SP.

@Dougal1984 thanks for the reply and sorry for cutting out the xy axis.

I am not sure why you say it is difficult to generate consistent returns. I’m looking at the big miners that provide good reliable dividends and generate a lot of cash within the business. Yes they are cyclic but many of the factors that affect them are fairly well know. Even if you held for the dividends and perhaps reduced at major peaks and increased at drops you can make a decent return.

In terms of GGP I have never looked at the company and it doesn’t seem to have much coverage (in terms of press etc) but there seems to be a couple of brokers who do cover it. Having never looked at it before I had a quick look at the chart. The share price ramped up until the end of 2020 and then dropped and has then been in gradual decline and from what I can see (with a quick glance) it doesn’t appear to pay a dividend. Thus it isn’t screaming “good buy” to me but (without doing any research) I’m guessing that it is one of those miners that may suddenly come good on one announcement or a takeover but I guess with significant potential downside risks.

Looking at recent history the chart gives plenty of signals. I tend to use TradingView together with some scripts and multiple indicators. However, just quickly looking at GGP.

The blue vertical lines are where I got clear positive signals and the red vertical lines were sell signals. The two downward yellow dashed lines are long terms SR lines from historic points in the chart. There was a set of buy signals in late Nov 2022 and a single sell signal on the 19 Dec. Then in Jan 2023 there were multiple signals. There was a clear sell on the 6 Jan but the price hit the downward SR line on the two previous days and was oversold. Without the sell signal (or even with a sell signal) the price could have broken through the SR line which it did try to do unsuccessfully 3/4/5 days later but without convincingly breaking the yellow line (coupled with the other signals) the probability was that the price was going to stay below the yellow line and retrace before attacking the yellow line again. Various candlestick formations seemed to reinforce this and the more technical indicators and scripts show a downward trend being established or downward momentum. Then in late Jan there are two strong positive signals from indicators and some bullish candlestick patterns. The price also crosses one of the moving averages and tries to cross another and the MA turn positive. There is then a sharp rise that signals a breakout going through the moving averages and the yellow SR line with strength. Personally I would have probably sold or reduced if the price got anywhere near the second higher yellow SR line (which it did) and multiple indicators then generated sell signals a couple of days later followed by the price dropping below the moving average and the moving average turning down. In addition the price wasn’t attacking the higher of the yellow SR lines. Any one of those warning signs I might have ignored but there were multiple. The price then went into a downward channel (arguably a converging channel) and didn’t really attack the upper level but did repeatedly test the lower one. Without looking at the bid/offer spread it isn’t clear whether there was even enough volatility/price movement to trade within the channel and it looks like a fairly tight channel.

Then on the 27 March indicators generate a positive buy signal and the price is clearly oversold. The moving average is also levelling out. There were also buy signal from scripts on the 28 March, The following day the price moves very sharply upward generating signals from multiple indicators and going through the moving averages and breaking out above the yellow SR line. 3 days later was a large peak closing price on overbought territory so it would have been very tempting to take profit. The next day indicators and scripts generate sell signals but the price has still remained at those levels so plenty of time to consider and analysis the signals but there was another warning signal on the 26 April. Today there are some indicators which are positive (and tradingview itself is saying indicators are overall “buy”) and the chart is saying that the price has finished green for the last two days (albeit with very little actual rise) but the scripts that I use are showing downward momentum with lower highs and lower lows but it would only take a small rise in the price to turn the signals.

So, I was trying to focus on the companies that pay good dividends and personally I see plenty of opportunity to make a very good return from those but I will still rely heavily on chart analysis with companies like GGP.

Just a further note about GGP - drawing a line from the all time peak on the 4/1/2021 to the peak on the 3/4/2023 produces a new downward line and the horizontal price movements over the last year have broken above that. Although this is possible a fairly weak signal it does create a positive signal the suggests that the line from the 4/1/2021 isn’t creating a new down channel/trend so there now appears to be a sideways price channel but there has been virtually no price movements to show the upper or lower levels for that channel or whether it may turn upward or down. I take the fact that the line from the 4/1/2021 hasn’t created a new down trend as a fairly positive signal. As I say there are several indicators (that I tend to consider to be good indicators) that are showing a downtrend/down momentum but are finely balanced so could very quickly turn positive and the it may simply be gathering some strength for a move in the price