Johnny, here is a POZ chart weekly which I believe drives the the zinc equities sector rather than the other way around. The chicken or the egg comes first sometimes..
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The recent bounce off the green level of support failed and I was not that hopeful even though I had earlier observed some MACD bullish divergence. Price bounced to the resistance on the upper orange level, rejected it and continued in the direction of the bearish momentum. Now that price has broken the green key support level, I suspect it will perhaps continue down, hang around in a sideway or even bounce back up to test the new resistance market in red highlight. Just like the earlier bounce, the red arrow pointing down is how I 'see' it play out in the fashion of the continuing bearish momentum.
The bottom orange level if you look left has a chunk of sideway price action that could act as firm support to build a base before any reversal can take place on a slow crawl back up.
Ever since the GFC sell off, Zinc price has been in a wide side way range so these type of market usually will test the lows again before moving back up. The actual 2 KEY level is the upper orange and green level that had to hold for price to move back up or else the momentum of price is shifting to the downside.
Throw in key steel components of of IO, Nickel and Met Coal which are now looking at breaking lows because of the supply-demand imbalance favoring the supply side, I think it will be some while for the imbalance to change.
This is a very complex inter-related market where several factors are at play and the simplistic fundamental that was the root of the discussions previously of Tier 1 mines closing thereby causing deficit of supply should be re-examined. I bought this argument much earlier during my investment in IBG many years ago but the POZ did not get much traction as it got stuck in a wide range.
The IBG chart on a longer term reflects the POZ in the past. IMO there isn't much to glean in the price action of the IBG chart moving forward unless you believe that zinc stock equities lead the zinc price.
If I put my self in the shoes of holders, the best management can do is get all the essential red tape ticked for example ML, working capital and just sit tight and wait for the fundamentals that drive the commodity price to turn. A lot of time have been wasted since GFC waiting firstly BFS, then the ranging POZ, GC/NS to push the development button to now looking for the elusive ML. For these reasons I am not in any urgency to be looking for exposure even if the SP continues to slide to its historical lows.
Those who favors averaging down will be aware what the risks are and we each have our different opinions which makes the market.
Lastly looking at a sliding BHP/RIO SP breaking through key support level this week is a sign of things to come. I don't think they look rosy moving into 2016 but anything can happen. Its a matter of the odds. Good luck holders.
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