so where to from here...

OK, so its probably safe to admit that RIO's slide has surprised us all.
I hope that none were caught in the swift decline from 98 - 87!

But where to from here?

The underlying company is sound. Profits were lower, and production didn't excite however its probably safe to say that RIO tinto is currently trading at a considerable discount.

TECHNICALS

- It punished the 50dsma over a week ago, at the $97 mark, where I thought we could see support. This support wasn't confirmed, so there was no buy signal.
- The market index sits on the 200dsma, and for RIO, this lies at $83.
- Next support is at $85 from April highs.
- Fibonacci 61.8 retracement is just under $85 taken from march lows. Taken from january lows, it puts the 61.8% retracement at $83.
- MACD is clearly negative and is diverging, with a recent flat histogram, suggesting that we may see some consolidation at current levels.
- Stochastics reveal oversold, but no buy signal as yet as %k and %d are both below 20.
- RSI is sitting on 30, suggesting its not oversold as yet.

Volume today on the decline was small. We finished higher than the open today.



CONCLUSIONS

1. Significant support at $85 and $83.
2. No current buy signal
3. A possible trade would be to consider accumulating stock between $83 and $85 (this is what I will be doing).
4. Downside target unlikely to exceed $80 (feb highs)

5. Wait for RSI to be below 30 at least, Stochastics to upturn on a double bottom, and MACD histogram to uptick before commiting serious money to the cause. Downside is always unexpectedly severe.


Any comments, always taken into consideration.