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Home / Trade Alert / Buy – Rio Tinto

This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.

Buy – Rio Tinto - 16 May 2018

Trade Parameters

  • Opening Price: 4350p
  • Stop Loss: 4170p (180p/4.1% below)
  • Profit Limit: 4710p (360p/8.3% above)
  • Reward vs Risk: 2.0x
  • CFD Margin: 5%

Technical Observations – For

  • Bullish breakout to highest since Aug 2011
  • Respects 3-day rule for holding a breakout
  • Stochastics & RSI stuck overbought = bullish
  • ADX (trend strength) still rising
  • Momentum rising
  • Bullish breakout on Point & Figure hart

Technical Observations – Against

  • Stochastics & RSI overbought
  • Directional Indicators near bullish extremes
  • MACD back at bullish extreme
  • Shares rallied 24% since early April

Analyst Comments

Most of UK Index Mining sector pushing fresh multi-year highs, helped by high oil prices. Weak GBP helps flatter value of dollar dividends. If USD turns lower, it could give further impetus to metals prices. Decent 5.3% dividend yield should attract income seekers looking for capital appreciation too. Company today said looking at acquisition opportunities in other commodities, while productivity gains should add $1.5bn extra cash flow from 2021.

Consensus is overall bullish (only 10% of brokers say Sell). However, the consensus target is 5% below current levels and 64% of broker targets still suggest downside. After the share price break-out, analysts may need to re-appraise both their ratings and targets. This may result in the army of Neutrals upgrading  their ratings, and everyone upping their price targets.

Next Event: Q2 Production, 17 Jul

Latest Broker 12-Month Consensus:  47% Buy, 43% Hold, 10% Sell (full breakdown on request)

Source: DowJones Newswires, Reuters News, Bloomberg  or Company Press releases

Long term, 8 year chart

12-month (daily) - MACD, Stochastics, Trend Strength, RSI, Momentum

Share 1wk 1m 3m 6m 1yr 2yr 3yr 4yr 5yr
Perf % 8.2 15.1 5.6 22.3 44.3 118.7 48.6 29.3 49.5
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This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.

Accendo Markets considers opinions and information contained within the research to be valid when published, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up, and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance. Prepared by Michael van Dulken, Head of Research

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