Boston, MA 09/18/2014 (wallstreetpr) – Vale SA (ADR) (NYSE:VALE) (Closed: 12.39, Down: 1.35%) had a gap up open after three consecutive sessions of rally on the back of the news of the company signing a cooperation agreement in iron ore shipping with China Ocean Shipping Company. The Bearish Harami candle formation though is not very conducive to any bullish hope and the best the bulls can think of a Neutral Triangle, according to the Neowave, or an Inverse Head & Shoulder pattern taking place with the neckline coming in $12.75. In that case, a break above $12.75 can produce an up move to the lower boundary of the last gap left open at $13.30. But the increased volume of 22.64 million against an average of 18.39 million goes against the scenario of the triangle, where generally, the tendency is towards low volume during the pattern formation.
The long term chart shows it to be a very volatile stock. The first rise had started from the 2002 bottom of $1.80 and culminated at the 2008 high of $44.15 before the crash of 2008 took it to $8.80 levels. The next global liquidity pump pushed it to $37.25 by 2011 but it failed to capitalize on this rise and dropped again. This last bear market has shown no signs of stopping yet, but smaller opportunities may still be available.
The initial fall from the 2011 top of $37.25 was steep, but the next phase of the fall from the 2012 top of $26.87 has been much slower. The momentum is at a make or break point from the perspective of the long term trend. The price is oscillating around the 2013 bottom of $12.30 and indicators like MACD & RSI suggest deeply oversold levels. Either the price breaks above $12.75 right now and extend the bounce or breaks below $12.00 levels and drop to test 2008-09 lows at $sub-$9 levels.
Very aggressive investors can buy the stock at current market price with a strict stop loss below $12.10.
