General Discussions, page-11060

I'm adapting a post I put up on another stock because the same analogy with graphite can be made. Think all the weapons of hype and manipulation of sentiment are in full swing emanating from the Reserve Bank to raise rates twice for shock treatment. The evidence on the AOD is not there, to support the glass half full mindset because the rise has been orderly and on analysis is consolidating. The dynamics of the RNU chart have followed on one hand the capital raise and on the other the delay in getting mining approval from which offtake s flow. This provides opportunity for marking down prices and influencing sentiment at this end of the financial year with a sizeable register. Nothing has changed the fundamentals in my view going forward.

Sentiment has little to do with value IMO. My macro view is that the world economy has been built on unsound money where central banks have not tackled the problem. The current bust is primarily an overseas bust because the monetarists have not been in control and kept kicking the can down the road for political reasons rather than exercising responsibility; and had not banked on catastrophic events such as Covid, and powerful autocratic governments that really don't use a market mechanism but exercised market power through control of supply. In time, the world will adapt with new trade alignments out of necessity and its not all bad for those that position themselves.

Another way to look at this in market terms is through volume spread analysis. High volumes and steeply falling prices usually indicate a selling climax. Then recovery. The McClellan Oscillator is used by analysts. It is an indicator that can be used in Trading View if people use that TA program and adjusted for any index. On the micro scene, that is why I use the Advance and Decline line.



We all anticipate that at some point there will be a rally in commodities because of trade re-alignments, run down of inventories (supply) due to war, Covid, central bank intervention as well as climate change. We are historically at the beginning of a super cycle. Australia is part of the world economy and when the US sneezes we catch cold because our banking system borrows from the Fed and elsewhere. There is tax selling around the rest of the world and despite local laws penalizing such practice, the practice is alive and well here.

However, in Australia we have markedly less inflation than overseas although natural disasters have caused havoc in food supply domestically. We have a floating dollar which can maintain an income stream. Our commodities are not in short supply for export, and when the dust settles on conflict, the demand will be high and Australia will become a price maker not a price taker.

The volatility and inflation are worse overseas than in Australia. Looking at the All Ordinaries Index for evidence, I would say the press have exaggerated what is in play in Australia, so its a matter of positioning and buying value in commodities. Note the relationship of the red A&D line to corresponding performance as the McClellan indicator does. Also note where price is in relation to the natural Fib pullback zone.


So I am expecting a rally and I am long. Apart from the need to get the climate change mitigation underway which calls for massive use of graphite there are expanding domestic populations. It would seem the world has not got away from defence led recovery when there is nothing else, and it is a war against climate change as well.

If RNU start mining graphite next year, then the planned vertical integration into manufacturing gets underway too. So near term production is likely to generate a substantial rise in price for RNU. The stock is primed for post tax year run. Undervalue now, irrespective of perceived sentiment in the market place. That's why I say sentiment has little to do with value and higher prices going forward in real terms. Sentiment is transitory which market makers take advantage of and often influence.