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Well in my days at BHP it was known as ‘the big Australian blue chip’ and still is, but really it has now become something of a resource monolith of global proportions.
But it does appear that at least for now BHP has run its run:
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It is struggling to rise up again and is into range trading mode.
And even when we look at the weekly we get a similar picture:
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I have arrowed the downward bias for the company’s share price and you can also note that it is still well off its all time high of about $50 in May 2008.
But if we look at a similar chart for the Materials Index we see there is still some further upside for the sector as a whole:
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I am cautious to over interpret such differences and would not plunder large sums of money on such possible outcomes but rather it just suggests caution. And in this case BHP is maybe not the Materials stock to back.
Now Index Funds will have to buy BHP for their Portfolios and this is probably enough to stop it from falling much further and that support may even be enough to allow it to ease higher.
Now there are ‘fundamental’ reasons BHP has come off - but that is not for discussion here. But when fundamental and technical indicators are co-incident it is worth listening.
And in any case there is nothing wrong with a ‘breather’.
Enjoy the ride
Tom Scollon
Chief Analyst |