Should we keep an eye on China?Sorry guys, but I need to open this debate.
Will VALE3 really make a double bottom in the region of 53.64?
I honestly have a big doubt right now. I'm starting to question my previous review for only one reason . Is this the real price for the company, that is, is your market valuation the current one?
I, looking to the left of the graph, realize that it is not.
The fact for this is quite simple.
Look at asset prices before the pandemic. It has always been working below the historical top region formed at the time (43.06) in September 2018.
Then, of course, you will come up with the following question.
-Ah, all commodities had a significant increase in the post-pandemic, so this is the main reason for the increase for iron ore and consequently the share price.
And I will answer: -Okay, I completely agree with you, but answer me a question, because the answer you will give me will answer your argument and consequently defend mine: “-Who is the biggest consumer of iron ore in the world? ” You will surely answer me: -China, of course. I will say. - Well then, who controls the price of this commodity is China itself, therefore the valuation of the VALE company is completely linked to the value of iron ore in the international market (ops Chinese).
Another factor I'm going to put on the table.
Look at the price of iron ore in the pre-pandemic Shanghai market. They are falling, right? Therefore, I believe it to be the recession (real estate) that was approaching and that was confirmed in the sequence with the collapse of the main Chinese civil construction companies (Evergrande and others - recently we had Country Garden).
Based on these assumptions, I'm going to kick the bucket and say the following: We will not have a double bottom (BRAZIL) (lol) , because I think that prices will seek two steps below, more precisely the region of 43.06, that historical peak of the time of 2018.
Is it too much of a trip for me to think that the asset will not fall, but rather collapse in the coming months? Because if I consider that China's economic power is shrinking, I can have this daydream of seeing VALE's role in seeking the informed region!
-Unfortunately for us, only time will tell if my daydream will be correct or not!
Then look at the bearish pivot of my daydream's monthly chart! (lol)
-Do your analysis and good business.
-Be Conscious. If Buy, Use Stop Loss!
-See below for other graphic reviews!