Interactive Investor

Are Glencore shares approaching a glass ceiling?

25th November 2021 07:30

Alistair Strang from Trends and Targets

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Independent analyst Alistair Strang got it right about Glencore's rally and has now refined his target level. 

As the American markets close for Thanksgiving, their final holiday before Christmas, we can only rue the state of a holiday parsimonious UK, our last trading holiday being in August. Traditionally, Thanksgiving Thursday witnesses very little happening with European markets while the US is closed, the day inevitably ending pretty flat.

Perhaps this year shall be different, thanks to markets recently tending to do their own thing. Wednesday saw Wall Street close slightly down, whereas the Nasdaq and S&P both managed slightly up.

Long story short, we’re not currently expecting fireworks from the FTSE 100, despite low level indications pointing at gains for Thursday.

As for Glencore (LSE:GLEN), the share has proven tediously slow this year. We reviewed the price back in February, giving a trigger level of 295p which was to provoke gains toward 408p. The pace of movement has been such, the price took until last month, just to reach 400p. We’re not convinced this glacial movement is wrong, just painfully slow, and suspect our target level can now be refined slightly.

Price gains now bettering 400p suggest gains coming to an initial 416p with secondary, if bettered, a pretty confident looking 463p.

We do suspect some hesitation shall take place, should 463p make an appearance within living memory!

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

Something pretty important is worth consideration from a Big Picture perspective. In the event Glencore manages to close a session above 416p, the share exceeds the highs of three years ago and shall now be regarded as entering a cycle toward a longer term 578p.

One thing about Glencore surprised us. We’d known of the companies metal & mineral mining business, always assuming copper etc was their mainstay. It was therefore a surprise to discover they also mine thermal coal for the energy market, a source which somehow or other received a blessing of sorts from the recent Climate conference.

Perhaps their stance as the market leader is recycling of copper earned them brownie points from the green folks. In addition, the company also market the products they mine, handling the international transport from sale to delivery.

To summarise, we feel Glencore enjoy many positives, perhaps just needing favourable market conditions for their share price to flourish properly. As the chart below shows, there’s an obvious glass ceiling at the 400p level and, should this finally break, the pace of acceleration may improve somewhat.

To cause concern, the share would need reverse below Blue, presently 340p. as a cycle to 188p becomes possible.

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. 

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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