Rio Tinto Group Faces Fraud Accusations

Rio Tinto Group Faces Fraud Accusations

Rio Tinto Group faces a probe by the U.K.’s Serious Fraud Office over its business dealings in Guinea, just months after Australia’s federal police started an investigation into payments relating to the $20 billion Simandou iron ore project in the African nation.

The prosecutor said in a statement Monday it was investigating the conduct of the miner, its employees and third parties.

The SFO announcement comes after Rio alerted authorities, including the SFO and the U.S. Justice Department, in November to a $10.5 million payment to an external consultant in 2011 for assisting with negotiations with Guinea’s President Alpha Conde. The company later terminated contracts of two senior executives, saying they’d failed to maintain standards of the company’s code of conduct.

Shares in the miner fell as much as 2.3 percent in U.S. trading after the news, and then pared most of the loss to close 0.5 percent lower. In Sydney, Rio declined 0.2 percent by 11:14 a.m. on Tuesday, as an index of Australian materials producers rose 0.4 percent.

Rio exited the Simandou project in October, selling its stake to partner Aluminum Corp. of China, referred to as Chinalco, after failing to attract the funding needed to develop it.

The investigation, which could stretch on for years, comes as Rio looks to appoint a new chairman after Jan Du Plessis stepped down in April. The company is planning to appoint his replacement by the end of the year.

Technical Analysis

Overall, the bias in prices is: Upwards.

Short term: Prices are stalling.

Intermediate term: Prices are ranging.

The projected upper bound is: 66.99.

The projected lower bound is: 61.59.

The projected closing price is: 64.29.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 5 black candles for a net of 1 black candles. During the past 50 bars, there have been 26 white candles and 23 black candles for a net of 3 white candles.

A falling window occurred (where the bottom of the previous shadow is above the top of the current shadow). This usually implies a continuation of a bearish trend. There have been 6 falling windows in the last 50 candles–this makes the current falling window even more bearish.

Momentum Indicators

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 76.4588. This is not an overbought or oversold reading. The last signal was a buy 2 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 53.11. 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 sell 47 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 -32. This is not a topping or bottoming area. The last signal was a buy 2 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 sell 7 period(s) ago.

Rex Takasugi – TD Profile

RIO TINTO FPO closed down -0.800 at 64.240. Volume was 39% above average (neutral) and Bollinger Bands were 40% narrower than normal.

Open     High      Low       Close     Volume
64.490  64.505  63.880  64.240  3,229,253

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

Moving Averages: 10-period    50-period    200-period
Close:                       64.23           62.98            60.93
Volatility:                25                 28                  33
Volume:                  1,954,610     2,332,527    2,421,557

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

RIO TINTO FPO gapped down today (bearish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
RIO TINTO FPO is currently 5.4% above its 200-period moving average and is in an upward trend. Volatility is low as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of RIO.AX at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on RIO.AX and have had this outlook for the last 17 periods.

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Ivy Heffernan

Ivy Heffernan, student of Economics at Buckingham University. Junior Analyst at HeffX and experienced marketing director.

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