Our ALGO engine triggered a sell signal for RIO Tinto into yesterday’s ASX close at $79.50.
This “lower high” pattern is referenced to the intra-day high of $82.20 posted on August 1st.
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RIO has also been removed from our ASX Top 100 model portfolio after achieving a 29.50% gain (and over $5.00 in dividends) over the last 569 days.
Since trading as low as $69.40 on September 6th, RIO’s share price has rallied over 15% in less than two weeks reaching a high of $80.00 on Friday.
We believe two of the reasons for the recent investor interest are the stabilization of the raw materials market and the announcement of RIO’s massive share buy back scheme.
According to a company release, RIO plans off-market purchases of up to 41 million of its ASX listed shares as well as on-market purchases of its UK listed shares.
In total, the plan could equal over $4.5 billion in capital returned to share holders.
As such, we feel the strong fundamentals driving the recent surge in the stock price will result in a near-term consolidation, as opposed to a change in trend to the downside.
Rio Tinto
