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I'm musing over 120 being "fair play for the current situation" in the coming weeks/months should the chip situation and metals pricing show no improvement. Some say the chip situation will resolve "soon", others from next year.
Yet media reports last week quoted one manufacturer saying they had been told their semi conductor chip orders are on a 12-month back-order waiting list, so the article concluded that the situation with chips will resolve slowly over - . . . years
- before full needs are met on a regular basis.
I think SLP has suffered worse than THS and JLP because of that Q4 update.
(Net profit fell by 64% in Q4 alone).
And also PGM production fell 6.5% in that Q4 period too, with "the quality of the feed" from client mines dropping, meaning fewer ounces from the ore it processes - thus leading to the next issue - raised costs!
- And one thing SLP is known for - is as a superb low-cost operator. That now looks under some threat should the poor quality feed continue into H1 and beyond.
Add on the other external issues and the market has responded negatively.
I took fright after the ATH intraday high of 148 or so, was reached in spring, and didn't look like it would return there soon, and then feeling uncomfortable with so much of an overweight position (especially as I took on additional positions in a cyclical/seasonal experiment at the same time) that for peace of mind I have been 'top-slicing' furiously to bring my overweight holdings down to manageable levels and thus lock-in some of the profits.
120 is my re-test area.
But feel happier having banked profits, and now feel lighter, slimmed down.
Q1 will inevitably be compared unfavourably once again to a now comparative high-level Q4
- but Q1 will still be seriously higher than Q1 last year, as will Q2 too, should the current metals price area hold. So this new 21/22 trading year should be okay.
I have no real fears for the full results next Monday (SLP's reputation as a high margin operator is seen in Q4 despite the fall in Q4 profit; SLP's profit margin in Q4 is higher than most others)
- it might only suffer when the media compares recent Q4 performance and any info in the results appertaining to the new current year of Q1 (didn't read of an end to the raw poor quality feed coming into SLP).
Rhodium is still undersupplied in most analysts opinion, so despite automotive lay-off's due to chip shortages, Rh may yet come back in price somewhat (and save the day?)
" Anyway on to this week, I'm expecting, as ever :) for us to break right our up and over the squid mark. "
------------------
Hi Stoodio,
Yes, only 4 trading days left until the results are published next Monday morning, so SP looking like it wants to run up bullishly to that day before the results.
I disappear up north from mid week, for the next fortnight-ish, so will not be around for the results (so a quick word after this post on the expected results)
As a characteristic of SLP, I've associated it as a stock that performs to the maxim: Buy On The Rumour And Sell On The News, in that over the past 5 years or so, the Q4 update comes out at the v end of July (and they've always been good to excellent) with the result that August became a knock-your-socks-off month in SP performance expectations of the full results in early September.
And almost always, after a superb August, the SP underperformed by the close of September - after receiving the good results!
This year, due to events outside SLP's control, the SP in July and August (usually superb performing months SP-wise) got blown out of the water to smithereens, with a big game-show booming: Uhh-ohh! miss this year.
So might that August rise be postponed until the results actually come out?
- or will events unfold as they usually do in September?
Or will the next 4 days 'be it'?
Interesting thought Velo. And agreed, Rhodium is a very murky market at best. Very hard to get a swing on exactly what prices and being paid where. Albeit I, when i dived in years ago to try to do exactly what you've done there, it got the better of me and i never really had it resolved in my head. I believe it varies coast to coast with various short-mid and lomger term contractual off takes and obligations and proxy agreements between supply and demand. Which doesn't help one bit!
Anyway on to this week, I'm expecting, as ever :) for us to break right our up and over the squid mark. Let's see. I think Sylvie tickled enough this past few weeks and is now ready to launch one more.
NB:
" As of Friday's close all 3 are closer to the vicinity of their 50% levels. "
-----------------
- Apart from Palladium, which is at the 38.2% level.
The 'road maps' -
Fibonacci sequence levels for all 3 metals.
As of Friday's close all 3 are closer to the vicinity of their 50% levels.
Will they head up to the next higher level, or down to the next below?
-------------
Fibbo%= Rh $
PLATINUM - ( Currently $1,000 as of Friday 27th Aug )
23.6% = 1,158
38.2% = 1,056
50.0% = 973
61.8% = 890
78,6% = 771
-
PALLADIUM - ( Currently $2,440 as of Friday 27th Aug )
23.6% = 2,665
38.2% = 2,464
50.0% = 2,302
61.8% = 2140
78,6% = 1,909
-
RHODIUM - ( Currently $17,400 as of Friday 27th Aug )
23.6% = 24,065
38.2% = 20,517
50.0% = 17,650
61.8% = 14,782
78,6% = 10,700
Typo!
" until last Monday it hit 17,500 on 24th Aug, and down to 17,000 on the 24th."
Should have been Monday the 23rd!
" until last Monday it hit 17,500 on *23rd* Aug, and down to 17,000 on the 24th".
Rhodium has a significant effect on SLP's revenue's (and hence the SP) and so far from Rh stabilising at 19,000 from the beginning of August up to 19th August, it's been dropping ever since (until last week).
I've never had a handle on Rh because there is no definitive market for the price of Rhodium. So taking the popular J/Matthey site as the template, decided I needed by hook or crook, some sort of a handle on all the metals, so this morning started with Rhodium.
I now have 2 price ranges which I feel diminishes the adrift-at-sea view on Rh, and I now offer a view on - until reality proves different, that is :)
Rh does not have a singular presence in my base data. And JM charts are inadequate for my needs in trend following, So had to use spreadsheet calcs using Fibonacci sequences.
And the result is (after taking the 24th March 2020 Rh significant low of 5,500
- up to the ATHigh of 23 March 21 of 29,800)
-------------------------
- that right now, where RH resided as of the end of last week, could well be the floor - the 17,000 area.
But if, after a period of rising/stabilising again - it returns to a retracing price range, then my next comfort zone to expect it to fall too is in the region of 14780's - and should that fail then further on to the end at 10,700
------------------------
August appeared to be stabilising at 19,000 after the drop from the ATH of 29.800 in late March, but it had slowly descended from 29,800 to 22,000 by late May, and down to 21,400 by early June, with 19,000 only holding out until the 19th Aug where it ceased stabilising at 19,000 and returned to dropping steadily until last Monday it hit 17,500 on 24th Aug, and down to 17,000 on the 24th.
The next 3 days were synchronised with SLP's SP as Rh rose to 17,100 the next day, 17,300 the day after and 17,400 by Friday close - v similar to the last 3 days of SLP's SP trend.
Here's the Fibbo levels I cane up for Rh -
Fibbo%= Rh $
23.6% = 24,065
38.2% = 20,517
50.0% = 17,650 (50% Strictly speaking is not a genuine Fibbo number)
61.8% = 14,782
78,6% = 10,700
If Fibonacci has any influence on the Rh market then the next upside level, could be back up to 20,517 (see table above).
(61.8% tends to be more significant in my observations most times than 50%, so a little unsure if the 50% 17,000 area is the bounce-off floor. But over the past week it's acting like it might be :)
- Whatever, I now have a roadmap for Rh :)
Thanks Velo, interesting thoughts as ever. A nice sharp hit up and over a squid this week will do nicely.
( Part 2 of 2 Concludes: )
. . . Similar bullish situations occurred from the 10th August and further back from the 20th July; both periods turned the Ultra-Short term trends to bullish - but both occasions went on to fail.
The Short-term trend (more dependable) did not /never crossed to the bullish upside on either of those occasions (because it was too soon).
The Ultra-Short term trend has now turned fractionally bullish on Friday night. No other trend - just that.
(Some indicators showing signs of rising from their slumber though).
P.P.S
Short-Term trends and Ultra Short-term trends.
I need clearer labels.
Thinking of labelling one of them the Minor Trend to differentiate. Does Minor trend sound a better fit than Ultra-Short term trend? (Ultra Short is the weakest trend, of all the trends I use).
================
Just re-reading before posting and realise with this post being longer than I anticipated, that I might appear to be sitting on the fence.
To be clear; I'm in with the sentiments of the header for this thread. Things are looking up. I'm just a bit hesitant on how far "up" is up. But I'm on board with things are looking up :)
(Part 1 of 2)
Hi Stoodio,
Pleasing to see your preference of the low 90's, finally reached.
It's now at Launchpad-One then :)
Days later and it was a slow burner then.
Such has been the consistent damage in this big retrace that I still haven't got a positive cross to the upside by any of the larger more meaningful trends. Usually the Short term trend is quite nippy - but it's not taken by this the slow burner approach - just yet.
Did like the look of the 3 days prior to Friday, but what an iffy trio those days were. From 'promising' I'd mentally upgraded the situation to 'interesting'; but personally, remained non-committal.
First target was a descending 90. With the second (Launchpad-Two) being 97.
However those trend-targets are dropping daily, with the second target as of Friday close now reading 96, which is nice (as just run off some pivot point targets for next Tuesday) - and if Friday's, bullish signal performance is to hold and build then I expect 96-ish/97 to get taken down on Tuesday. If not, doesn't matter, it's back to the slow-burner approach.
Anyway a 92 close took care of that 90 target. So if you stick to your guns for a triple figure 100 "a quid next week" :)
- even better; as all I seek, in order to move forward positively, is a close no less than 96/97 by Tuesday close.
Trends:
Only by Friday close, did I finally see the first credible, but highly-strung, Ultra-Short term trend cross to a bullish reading, but only just. That's quite a flimsy pretext to say the first trend line has turned bullish; I'm always saying, don't place too much emphasis on the fliberty-gibbet Ultra-Short term trend, as it can flip in a heart beat.
But it's current position does come under "well that's interesting."
The real-deal, more significant trend lines are still very wary, and none of them are near turning to the upside yet. (Mathematically imposible in these early days).
PS. I never usually mention 'micro-trends' as it's pushing the envelope to ridiculous levels (scrapping the barrel territory) but they crossed to the bullish upside by close last Wednesday. Hence, from promising to interesting.
To be fully committed I need the Short-Term trend to turn bullish, that would be confirmation - a go-er!
And as said, it's some days away from that yet.
Loose trousers is the phrase I've read to describe the current outlook. If you can accept loose fitting, too-baggy trousers, which fit everyone, then the SP now changing to the bullish upside can be offered up.
Me? Not budging until the fat lady sings and the first significant trend (Short-term trend) crosses to the upside. Been too much persistent SP destruction, for me to change on such early-days bullishness.
Similar bullish situations occurred from the 10th August and further back from the 20th July; both periods turned the Ultra-Short term trends to bullish - but both occasions went on to fail...
( Continues > > > )
Good man, i'll be sippin' on a mocktail poolside in anticipation :)
Yes, tomorrow Sat :) hopefully.
Back over a squid next week, thanks for coming.
Velo, anything to add? :)
Share prices in general will have picked-up after "U.S. equity markets are soaring to new records after Federal Reserve Chair Jerome Powell suggested an increase in interest rates won’t be coming anytime soon" comment at Jackson Hole symposium.
Well that feels better.
Well who’d have thunk it?
;)
Days not ended yet stoodio, but yes it would be a nice end to the week.
Fingers crossed.
Wouldn't it be funny (after all the weird heated debate aimed at me) if we finished the week somewhere along the lines of where I said we would? Wouldn't it? Huh? No? Yes?
Haha. I'll take it :)
At the moment I think it it a good time still to buy JLP but I don't think that this is a good time to sell SLP, like Craig I think the announcement of some form of divi here might have a beneficial impact.
You'd have definitely have benefited from switching from SLP to JLP a couple of weeks ago. If you had, you'd now be in a position to rotate back into SLP. Is this still a good time to buy JLP or sell SLP?
Taken from H1 report - Just to add some context
MARKET DYNAMICS
Both PGM supply and demand were disrupted during H1 2021. Anglo American Platinum’s second converter plant outage continued to impact supply during Q1, particularly rhodium, ruthenium and iridium, which have longer processing pipelines than platinum and palladium. Norilsk suspended operations at two underground mines due to flooding in March. Coupled with an incident at the Norilsk concentrator earlier this year, a supply reduction of approximately 700koz 4E is forecast for 2021 as a result. Both these supply disruptions provided support for PGM prices, particularly during Q1 2021. Record high rhodium prices of US$30,000/oz were seen in March, while ruthenium prices increased 196% from the start of the year, moving to a maximum price of US$800/oz during the period. Similarly, iridium prices increased 142%, starting the year at US$2,600/oz and peaking at US$6,300/oz for 6 weeks.
The ongoing global semiconductor chip shortage continues to impact negatively on auto production with Western Europe and North America equally the worst affected regions, followed by China. Despite the chip shortage beginning to ease as new supply comes online, the impact on global automotive supply expected to persist into Q1 2022. Original Equipment Manufacturers (OEMs) are attempting to mitigate the impacts by prioritising higher-margin models and omitting electronic functionality from vehicles where possible. Some continue to build vehicles, planning to install the missing chips once they become available. New and used car prices hit record highs in the US as demand far outweighs supply, and new car inventory dipped to as low as eight days for some OEMs during the period. In Europe, electric vehicle car registrations saw double-digit increases in Q1 2021, taking market share from diesel and gasoline. PGM prices responded accordingly and eased during Q2 2021. Despite the chip shortage, light vehicle production is expected at around 83.5m this year, 11.2m vehicles higher than a COVID-19 hit 2020, but not quite at 2019 levels of 86.5m vehicles. BEV market share is forecast at 5%. Easing of the global chip shortage end 2021/early 2022 is expected to result in a recovery of global auto production. Pent up demand for new vehicles, particularly in the US, remains strong and any ‘lost’ vehicle production is expected to be moved into 2022. Palladium and platinum industrial demand continues to recover following COVID-19 disruptions in 2020, and is forecast to be approximately 1-2% lower than 2019 levels. Although platinum jewellery demand is expected to recover somewhat from 2020 levels, net demand is unlikely to exceed 1.2 moz this year. Overall, we forecast 3E PGM to remain in deficit at the end of this year: Platinum is expected to be in surplus of around 750koz while Palladium remains in a 1moz deficit. The Rhodium market is expected to move into balance by year end. These forecasts support current
prices.
Sorry to intrude not invested in any...but a good investment strategy would depend if selling and investing in JLP is to average down or up. Personally I wouldn't average up but diversify, as there are many good opportunities out there, more over JLP is still PGM even if less so.
Craig, I've mentioned that leftfield move before, and don't necessarily see it as a risk :) Everything comes with a price.
I am also invested in both - slp first then jlp.
I'm more impressed with the growth activities of jlp, hunting out new projects etc. That comes accross in interviews etc
Slp look less focused on similar growth, but are concentrating on their production, and potentially some focused extraction from their existing undeveloped licences.
They did mention some tenders in the last results presentation I saw, but it looks much less of a focus.
I wonder what the cash pile is going to be used for.....
What are the risks of a management buy out ?