Morning Report Monday 19 May 2014
Iron trades close to 2 year lows on China concerns, should be run or buy?
On Friday night, Iron Ore closed on the psychological US$100/t, a decent break below this level I believe will create a degree of panic that will bring Fortescue (FMG) into my buy target area. Chinese economic concerns are continuing to mount and world Iron production is rising, clearly not a bullish combination for the Iron Ore price. Short sellers (traders betting on prices to fall) have switched their attention from Fortescue (FMG) to Atlas Iron (AGO). A staggering 11.5% of Atlas shares, 5.5% of FMG and 1% of BHP and RIO have been sold short, note these shares have to bought back at some stage! The breakeven Iron Ore prices become sharply into focus as the commodity falls to 20 month lows:
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