Materials have quietly outperformed in the last three months as the global economy recovers. Last week’s numbers somewhat confirmed that trend, with strong job gains in areas like construction and factories that can boost materials demand. Perhaps even more important, Chinese manufacturing data (PMIs, profits) were strong across the board.
Today’s idea fits into that global-recovery narrative: London-based metals and mining giant Rio Tinto.
RIO has had a lost decade since the 2008 financial crisis, drifting sideways as the Nasdaq moved from the lower left to the upper right. However the chart may be presenting an opportunity for investors with a glass-half-full view of the global economy.
First, RIO is holding $60 – a peak multiple times in 2012, 2013, 2014, 2018 and again last January. That could mean old resistance is becoming new support.
Second, the price action ever since July has been very tight as it grinds above that line. At other times, like April 2019 and June-July 2019, RIO tested over $60 and failed. This time, it’s held and only closed under that level once (last Thursday, October 1).
Finally, RIO had a bullish engulfing candle on Friday (lower low and higher high) following that false breakdown.
All of those points may suggest the downside forces are exhausted at a time when the macro backdrop could be improving.
TradeStation is a pioneer in the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
Today’s idea fits into that global-recovery narrative: London-based metals and mining giant Rio Tinto.
RIO has had a lost decade since the 2008 financial crisis, drifting sideways as the Nasdaq moved from the lower left to the upper right. However the chart may be presenting an opportunity for investors with a glass-half-full view of the global economy.
First, RIO is holding $60 – a peak multiple times in 2012, 2013, 2014, 2018 and again last January. That could mean old resistance is becoming new support.
Second, the price action ever since July has been very tight as it grinds above that line. At other times, like April 2019 and June-July 2019, RIO tested over $60 and failed. This time, it’s held and only closed under that level once (last Thursday, October 1).
Finally, RIO had a bullish engulfing candle on Friday (lower low and higher high) following that false breakdown.
All of those points may suggest the downside forces are exhausted at a time when the macro backdrop could be improving.
TradeStation is a pioneer in the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
