Mining Giants Focus: Anglo American, Antofagasta, BHP Billiton, Rio Tinto

One of the great conundrums in the financial markets, apart from people trying to work out exactly what the Bank of England Governor Mark Carney does (once setting aside marathon running), is when/how the mining sector may actually snap out of its multi year doldrums. In fact, even though as late as 2010 this particular asset class was described as being in a supercycle, it has actually been in a superslump, one which it appears loathed to escape from. This may hardly be surprising given how overextended it was, and given the way that we are in a period of questionable economic growth and worst of all, suffering from the threat of deflation. Nevertheless, conventional analysis would suggest that 5 years plus should be enough for even the hottest of bubbles to unwind, and for the companies in question to slim down enough in terms of costs, to become lean, mean, fighting machines. Unfortunately, it may be the case that such an idea could be verging on wishful thinking, even though as we shall see from a charting perspective, there are some early signs of recovery. Helping out leading FTSE 100 mining stocks is the way that they appear to have withstood the worst signs of the bearish metals prices nightmare of the recent past.

For instance, in the case of Gold we have so far seen the $1,180 zone hold as support. This may be enough to deliver at least a near term recovery for the likes of Anglo American (AAL). The rationale is that the stock on its daily chart is in a mildly ascending price channel in place since December. According to this analysis, the floor of the channel and notional support is level with the 50 day moving average at 1,084p. Provided there is no end of day close back below the 50 day line, the upside here could be as great as the 6 month resistance line projection at 1,300p plus. The timeframe on such a move is regarded as being as soon as the next 4-6 weeks.

Antofagasta (ANTO) did have a 2014 to forget, after the initial flurry to start the year. But at least it can be said that for 2015 to date, things have stabilised. What has certainly helped over the last few weeks is the way that the chart boasts a bull flag holding well above the 200 day moving average now at 731p. But at least for short term traders it is the floor of the flag/20 day moving average at 777p which may be key. The implication is that at least while there is no end of day close back below the 20 day line, the upside here could be as great as an April price channel top currently heading as high as 900p. This is a destination which one would expect to be hit by the middle of next month.

Finally, in the case of Rio Tinto (RIO) we have a somewhat complex charting position, complicated by the issue of the March gap to the downside through the 200 day moving average, now at 3,033p. The message is therefore that one would be happiest if there was an end of day close back above the 200 day line as a momentum buy trigger, before taking the plunge on the upside. The RSI at 56, comfortably above neutral 50 is a leading indicator on the buy argument. This would imply that the 200 day line will be cleared over the next few sessions or sooner, with the implied target towards the September price channel target of 3,300p as soon as the next month.