Why are RIO and RTP down? IMO, this is what’s going on
First, take a look at how RIO and RTP did with the most recent iron-ore price increase (RIO last increased the selling price of iron pellets to Mittal Steel by 86% on 4/8/2008).
So why isn’t that happening today? Well a few things:
- NASDAQ, S&P and DOW are all exhibiting downward Head & Shoulders pattern right now. FYI, H&S is a a very reliable trend reversal technical chart and unfortunately in the case of the American Exchanges it’s indicating a downturn, which’ll create new support and resistance levels, if the curve breaks-through the current support levels. Technical traders are bearish currently. See charts below
- Oil prices: These do impact any form of mining/manufacturing industry
- U.S. crude futures jumped $3 at $143 a barrel this morning
- The market is very pessimistic with increase in oil prices, as investors understand that companies are paying higher prices for fuel and raw materials.
- IEA warns of medium-term supply tensions in oil supplies
- Stock market futures:U.S. stock futures slid, putting benchmark indexes on the brink of a bear market, as an almost $3- a-barrel jump in oil dimmed the outlook for corporate profits and more analysts reduced earnings estimates for banks.
Is it Doomsday, yet?
Not yet, there’s still hope. Marketwatch (where I got the previous charts from) also has this interesting chart to put things in perspective— the market can redeem itself if the Dow finds a support level soon. We’ll have to wait and watch here, but I’m optimistic.
I’d love to hear your thoughts…
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