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Take aim on platinum and Mittal SA
Colin Abrams
Posted: Wed, 10 Oct 2007
[miningmx.com] -- LOOKING at the metals sector, we start with a chart of steel producer Mittal SA, which has given an important breakout on its chart.
We also look at the rand platinum price (the platinum price expressed in rand terms), which is important because it’s a good indication of the profits South Africa’s platinum mines will make.
The chart of Mittal SA shows it to continue significantly higher over the medium term despite any short-term pullback.
Meanwhile, the rand platinum price is showing a higher target, also over the medium term (at least), which is good news for platinum stocks.
Please note: For more recommendations and charts by the author on shares, stock indices and commodities, please go to www.themarket.co.za.
MITTAL SA – BULLISH BREAKOUT
Trend: Short term up but overbought. Medium and long term, up.
Strategy: Traders and investors to buy on a pullback.
Click on image to enlarge
(Daily)
* Mittal has broken out of a large broadening formation (lines 1 and 2). Far higher pieces are expected over the medium term at least (if not longer).
* Over the short term the stochastic oscillator (on top) is overbought, so look out for a minor pullback at any time.
* Traders and investors buy on a pullback towards R134. The closer to that level you can buy, the better.
* Short-term traders can scale in and out of rallies, but medium-term players should simply hold all the way up to the targets. The minimum upside target is R150 – ie, the height of the pattern projected up. But expect that target to be comfortably exceeded, with R185 being far more likely over the next six months.
* Place your initial stop as a close below line 3 support (R130).
RAND PLATINUM PRICE – HIGHER TARGET
Trend: Short term up but overbought. Medium and long term, up.
Strategy: Buy SA platinum stocks on a pullback.
Click on image to enlarge
(Daily)
* After going sideways for many months, the rand platinum price has broken out of a symmetrical triangle (lines 1 and 2), which is a bullish development.
* The daily stochastic oscillator is overbought but can remain so for an extended period in a strong trend. Nevertheless, the chance of a minor pullback is certainly there before more upside.
* The current breakout is now setting up a minimum target of R9,928. The level at the time of writing was R9,388.
* That’s ongoing bullish news for South African platinum shares (which have already moved up in anticipation, but still have higher to go). Therefore, buy South African platinum stocks on a short-term pullback there. Focus on the two leaders: Anglo Platinum and Impala Platinum.
* The rand platinum price can pull back to R9,240 over the short term, setting up the mentioned buying opportunity.
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