Morning Report Wednesday 15 October 2014
Please view our Market Matters Video Update 15th October, FLT, ANZ and BOQ plus FMG
At one stage yesterday, Fortescue Metals (FMG) had surged over 22% since the lows of last Friday. The recoveries in BHP and RIO were also impressive, but approximately half on a percentage basis. The current market is slowly providing solid investment opportunities, but for traders, movements are happening everywhere. The Iron Ore sector has significantly established short positions, with Fortescue reported to have a short position well over 10% of its market capitalisation, hence rallies are likely to be dramatic as we have just witnessed – to cover the FMG short position, it would take 18 days of average volume turnover. As I have often discussed, predicting the price of commodities is extremely difficult at best, as we are witnessing with both Iron Ore and Crude Oil at present. Hence, with resource based stocks, I look almost exclusively at pure technical data and leave fundamentals to more predictable business models.
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