Saturday, 16 March 2024

By Murray Dawes Editor, Retirement Trader and Fat Tail Microcaps

[2 min read]

Dear Reader,

Two weeks ago I sent you a Closing Bell with the title ‘Sell Signal in Iron Ore’.

Since then Fortescue Mining [ASX:FMG] is down 9%, Rio Tinto [ASX:RIO] is off 7% and BHP Group [ASX:BHP] has slumped 6%.

The iron ore price has dived 6% since the video and looks like it is just getting started on its move to the downside.

I haven’t been short selling stocks in my trading services for years, so you had exclusive access to that idea as a reader of Closing Bell.

The reason I put these videos together for you is so you can see my work in action, and I think the call on iron ore is a neat case study of what happens when a solid technical analysis set-up aligns with the fundamentals.

Set-ups like this don’t grow on trees but when they do occur you can reap the benefits quickly.

Since FMG, RIO, and BHP account for around 15% of the market cap of the S&P/ASX 200 [ASX:XJO], the slump in their price is being felt across the board.

The ASX 200 has fallen nearly 3% this week on the back of iron ore weakness and is at risk of confirming a false break of the 2022 high, which could see it falling back into the interminable range of the past few years.

Of course, I may be wrong on this. And if you’re of the more speculative mindset I encourage you to check out my mate Callum Newman’s latest work. Callum has been shooting the lights out lately and remains bullish on the small cap sector, which to be fair has underperformed the ASX200 significantly in recent years.

So while I’m tentative on the major index thanks to the influence of the iron ore miners, that’s not to say other sectors won’t continue to do well.

After all, the S&P 500 remains rock solid and the long-term trend for the ASX 200 is still up, so I remain bullish, but we may have to navigate heightened volatility in the short-term.

In today’s Closing Bell video I update you on the situation in iron ore and analyse FMG, RIO, and BHP. I also have a look at the precarious situation for the ASX 200 if iron ore keeps falling and have a quick squiz at the US 10-year bond yield chart.

Regards,

Murray Dawes,
Editor, Retirement Trader and Fat Tail Microcaps

Murray Dawes is our resident expert trader and portfolio manager. He is a former Sydney Futures Exchange floor trader who went on to design custom trading systems and strategies for ultra-wealthy clients (including one of Australia’s richest families). Today, his mission is to help ordinary Aussie investors make profitable investments, while expertly managing risk.

He uses his proprietary system for his more conversative and longer-term-focused service Retirement Trader…and then applies the same system to the ultra-speculative end of the Australian market in Fat Tail Microcaps (this service is strictly limited and via invitation only).