Boston, MA 09/16/2013 (wallstreetpr) – Vale SA (ADR) (NYSE:VALE) (Closed: $16.04, Down: 1.78%) opened with a gap down on Friday and moved in a narrow range before going down a bit more to finally close near the day’s low. The near equalities of the open with the high and the close with the low created a near perfect bearish Marubozu, emphasizing the dominance of the bears. The volume didn’t really give any clue as at 19 million, it was exactly on par with the average volume.
The stock had an amazing rally in the period of 2002 – 2008 when it reached a high at $44.15 from the measly low of $1.80. Nearly all the gains made in this period was lost in the vicious bear market of 2008 when it reached a low of $8.80, a level last seen in 2005. Counted among one of the most volatile stocks, it raced to $37.25 by early 2011 to lose almost all of it once again. The next drop has brought it to $12.39 in 2013 so far and if the pattern continues, can even take it to the 2008 bottom again.
In the period of October 2011 – February 2012, a Flat correction took place and the next fall from that 2012 top of $26.87 contained itself in a perfect falling channel. The last bottom of $12.39 missed the lower boundary and the price has not reached the upper boundary yet. The current fall originated at exactly 50% retracement level of the last fall from $21.88 to $12.39.
In the daily charts, we can see an Inverted Head & Shoulder, a bullish reversal pattern. The targets are still unfulfilled. If the price can get demand from the multiple supports at $15.90, $15.50 or even $15.20 – $15.30, then it can be expected to reach the targets of $17.75 and $19.50 in the coming months. A break below $14.80 and $14.20 would signal major weakness.
