BHP Billiton Limited (ASX:BHP) 20/20 Hindsight

BHP Billiton Limited (ASX:BHP) 20/20 Hindsight

HP Billiton has released a $250m (£193m) payment that will go towards rehabilitation work in Brazil, where efforts continue to clean up a deadly tailings dam collapse.

The world’s largest miner by revenue will put $174m towards the Renova Foundation to aid clean-up work for the rest of this year and pay compensation to the victims of the Samarco disaster in 2015.

In a hindsight 20:20-style reflection, BHP Billiton Chairman Jacques Nasser said his company’s $20 billion investment in shale oil and gas in 2011 was a mistake.

BHP’s massive investment tied its financials to operational developments in the shale sector just three years before the oil price drop in 2014. Since the crash, pre-tax writedowns have cost the investment firm $13 billion.

“If you had to turn the clock back, and if we knew what we knew today, we wouldn’t do it, of course we wouldn’t do it, but go back and put yourself in our position at that time,” Nasser said at a business seminar this week, reflecting on the shale purchase. “We bought exactly what we thought we were buying, but the timing was way off.”

BHP Billiton Ltd. (BHP.AU) has approved US$184 million in initial funding for a project that would help it maintain iron-ore production in Western Australia when its Yandi mine reaches the end of its economic life in the early-to-mid 2020s.

BHP Billiton Limited is a global resources company. The Company is a producer of various commodities, including iron ore, metallurgical coal, copper and uranium. Its segments include Petroleum, Copper, Iron Ore and Coal. The Petroleum segment is engaged in the exploration, development and production of oil and gas. The Copper segment is engaged in mining of copper, silver, lead, zinc, molybdenum, uranium and gold. The Iron Ore segment is engaged in mining of iron ore. The Coal segment is engaged in mining of metallurgical coal and thermal (energy) coal. Its businesses include Minerals Australia, Minerals Americas, Petroleum and Marketing. The Company extracts and processes minerals, oil and gas from its production operations located primarily in Australia and the Americas. The Company manages product distribution through its global logistics chain, including freight and pipeline transportation. Its businesses include Minerals Australia, Minerals Americas, Petroleum and Marketing.

Overall, the bias in prices is: Downwards.

Short term: Prices are stalling.

Intermediate term: Prices are trending.

By the way, prices are vulnerable to a correction towards 23.74.

The projected upper bound is: 24.17.

The projected lower bound is: 22.37.

The projected closing price is: 23.27.

BHP BLT FPO closed down -0.200 at 23.280. Volume was 43% above average (neutral) and Bollinger Bands were 9% narrower than normal.

Open         High         Low           Close         Volume
23.190      23.410      23.160      23.280      12,699,105

Technical Outlook
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish

Moving Averages: 10-period         50-period     200-period
Close:                       22.72                23.52             24.29
Volatility:                31                      25                   33
Volume:                   9,346,980      8,978,146      8,801,426

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

BHP BLT FPO is currently 4.1% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of BHP.AX at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on BHP.AX and have had this outlook for the last 11 periods.

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 90.3134. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 4 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 51.20. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 6 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 64. This is not a topping or bottoming area. The last signal was a buy 4 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 1 period(s) ago.

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John Heffernan

John Heffernan is a Junior Analyst at HEFFX. John is studying Economics and is a contributor on equities at Live Trading News.

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