Rio Tinto Limited (ASX:RIO) HEFFX Highlights

Rio Tinto Limited (ASX:RIO) HEFFX Highlights

Rio Tinto Limited (ASX:RIO) HEFFX Highlights

  • Rio Tinto shareholders could be set for a treat when it reveals its first half profits in August, with RBC Capital Markets saying the miner could pay a $US1 billion special dividend.
  • The broker says Rio Tinto (RIO) is in a good position to pay out an additional dividend above the $US0.86 first dividend per share they are forecasting as the miner’s gearing has fallen on lower capex, cost cutting and a rebound in commodity prices, all of which are helping boost free cash flow. Here’s why RBC Capital Markets reckons there could be a cash bonanza:
  • We expect the business will generate an additional $US4.2bn in FCF in H2, further improving balance sheet strength. We see a $US1bn dividend (or buyback funding, or both) as a level which will allow for the year end gearing to be at 13 per cent with net debt at $US7.4bn.
  • Management has commented multiple times in light of the current commodity price volatility that they are happy to stay below target levels.

Rio Tinto Limited (Rio Tinto) is a mining company. The Company is focused on finding, mining and processing of mineral resources. Its segments include Iron Ore, Aluminum, Copper & Diamonds, Energy & Minerals, and Other Operations. Its products include aluminum, copper, diamonds, gold, industrial minerals (borates, titanium dioxide and salt), iron ore, thermal and metallurgical coal, and uranium. The Iron Ore product group’s operations are located in the Pilbara region of Western Australia. The Company’s business includes bauxite mines, alumina refineries and a range of aluminum smelters. The Copper & Diamonds product group has managed operations in Australia, Canada, Mongolia and the United States, and non-managed operations in Chile and Indonesia. The Energy & Minerals has operations across six sectors: borates, coal, iron ore concentrate and pellets, salt, titanium dioxide and uranium.

Overall, the bias in prices is: Sideways.

Short term: Prices are stalling.

Intermediate term: Prices are trending.

By the way, prices are vulnerable to a correction towards 63.01.

The projected upper bound is: 65.78.

The projected lower bound is: 60.46.

The projected closing price is: 63.12.

RIO TINTO FPO closed down -1.330 at 63.050. Volume was 25% below average (neutral) and Bollinger Bands were 9% wider than normal.

Open          High         Low           Close         Volume
63.500      63.530      62.770      63.050      1,773,897

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

Moving Averages: 10-period       50-period      200-period
Close:                       65.01               62.65             60.64
Volatility:                16                     27                   33
Volume:                   1,636,923      2,312,069      2,409,128

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 4.0% 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 moderate flows of volume into RIO.AX (mildly bullish). Our trend forecasting oscillators are currently bullish on RIO.AX and have had this outlook for the last 12 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 19.6511. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 6 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 46.61. 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 42 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 -210.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 11 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 2 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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