Morning Report Tuesday 22 July 2014
Will the rally in Australian Iron Ore stocks likely continue?
Unfortunately the definitive answer is, I’m not sure, but I can say with a strong degree of confidence that the recent disconnect between the Iron Ore Price and the Australian major Iron Ore producers (BHP, RIO & FMG) is unlikely to continue. Charts 1 & 2 clearly illustrate that over the last 5 years the price of all 3 major Australian Iron Ore miners has tracked the underlying Iron Ore price very closely. I feel a few factors have created this rally in the sector. I recognised in June, that Fortescue Metals (FMG) represented a solid trading opportunity under $4 on a risk / reward basis but I did not anticipate the aggressive 20% unfolded.
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