Alarm bells ring for mining sector

Our chartist focuses on another sector with alarm bells ringing - mining. What are the warning signs?

The fact that I'm not so sure about the mining sector's prospects is a fairly big issue as we've already shown the banking and oil & gas sectors as dangerous.

The alarm bells are ringing, warning of imminent stock market reversals as we express concern at the plethora of dangers queuing up.

For the mining sector, it is presently trading around 17,385 points, below the uptrend since 2016.

This results in the expectation of traffic below 17,350, looking capable of reversal down to 17,060 and the probability of a short-lived bounce.

Our secondary, if such a level breaks on an initial dip, is at 15,618 along with a real bounce, hopefully.

Serious danger awaits should the market actually close below this point as severe reversal down to the 12,100 level calculates as very probable.

The implication behind this is fairly straightforward. If stalking a major miner due to their attractive share price, it shall prove wise to glance at the ruling sector (NMW1770) and check its position.

Something which looks like a bargain could easily bury investors fairly quickly.

To consign this scenario to the tailings pile of analysis, the Mining Index needs to better 18,220 points as this should make major miners attractive again, due to the potential of a sharp lift to 19,322 and relative safety for the sector.

For now, confidence is lacking.

Source: Trends and Targets      Past performance is not a guide to future performance

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang, or interactive investor will be responsible for any losses that may be incurred as a result of following a trading idea.