RIO Trade Update - China Easing

China Central Bank announced over the weekend that Reserve Requirement Ratio or RRR (the ratio of the money Chinese banks must keep in the bank, used to control credit growth) would be cut by 50 basis points from February 24th.

That annoucement is bullish for many miners including RIO because RIO earns 30% of revenue by selling Iron Ores, Copper and Coal to China.  Cutting RRR means Chinese government has allowed banks to pump more credit into the slowing economy, preventing the so-called hard-landing scenario.

Since Monday is Public Holiday in US, I highly recommend closing RIO short positions on Tuesday. If entered before or on the result date, you should not lose any cent.

Good Luck

RIO Trade Update

• Feb 9 Earnings disappointed Investors and Traders therefore the trade was to SHORT.
• RIO has been trending down even before the result. But from the result date, it has made 5% unrealised profit so far.
• Money Flow and MACD both confirm trend reversal.
• Tension between Greece and its creditors has been rising fast and markets are spooked of disorderly Greece default.
• Profit taking should happen around $55. That would make 8% return unleveraged. With 1:3 leverage, return would be 24% easily.

Good Luck!

RIO ADR Daily Chart

Trade of the Month - RIO earning

stock quote : RIO (RIO TINTO ADR)
earning release : Full Year Result (Feb 9, 2012 Thursday)
current technical : Heavily Overbought
earning expectation : in-line earnings is expected to trigger "sell-the-news" trades. only much-better-than-expected earnings can lift the share price into the new trading zone 65-75 range.

To Short

If $65 resistance holds.
Target $57-55
Stop-loss $68+

To Long

If $65 resistance is decidely broken following blow-out earnings
Target $72-74
Stop-loss $62-

Chart

RIO (ADR) Daily Chart

Good luck!