Story Highlights
- Wall Street hates iron ore producers today.
- John’s Chart of the Week predicts a short-term 12% rise — and a 30% dip. Find out how you can make 150% gains with this stock’s volatility.
- Following his Apex Profit Alert system, you can easily play both moves in this stock — and dozens of others just like it.
The price of iron ore rose 70% in the first seven months of this year.
Then the price dropped 25% from $120 per ton in August to settle in a range around $92, where it is today.
Big moves! And there are more to come…
Financial and industry news websites claim iron ore will fall even further.
Reuters reports: “Fresh steel production restrictions may curb iron ore demand in top steel producer and consumer China. … Market participants are also keeping an eye on supply-side issues.
“Improving iron ore supply from Brazil and Australia has pushed port inventory in China to a five-month high of 129.95 million tonnes, latest SteelHome estimates showed.”
This negative outlook makes sense because iron ore demand is not strong enough to match supply at these prices.
When there is too much of anything, the price will fall. You might normally avoid a market that’s expected to fall.
But don’t ignore the profit potential in the iron ore market right now.
One stock — a company that’s one of the top three iron ore producers in the world — is poised to jump 12% in the next six weeks before demand worries drag it down 30%.
It’s possible to position ahead of these ups and downs … and make a whole bunch of money while we’re at it.
I use a proprietary trading system that tells me how. More on that in a bit…
First, check out this Chart of the Week. I’ll show you a way investors like us can grab a quick profit on the ups and downs of an iron ore stock.
The Tool I Use to Forecast Prices
Most investors devour news and fundamentals to make trading decisions.
I read plenty of news, but I don’t rely on it.
I prefer to base my decisions on price patterns.
Emotions — fear and greed — cause price patterns to form. Our emotional nature is predictable, and so are these price patterns.
I trade a few patterns. I call them Apex Movement Patterns (AMPs).
AMPs are part of the Apex Profit Alert system I developed with my colleague Matt Badiali to trade natural resource stocks for double- and triple-digit gains.
Watch my video below to learn more about this system.
This Brazilian company is one of the largest iron ore producers.
Notice the AMP in the first red box. It began in February and lasted through June.
This AMP — which I labeled “2” on the chart — consisted of three price waves labeled A, B and C:
- Wave A pushed the stock up.
- Wave B pushed the stock down.
- Wave C pushed the stock back up again.
A similar set of waves is forming right now.
We can buy this stock to trade Wave C and have the chance to earn 12% while this AMP finishes. That’s a nice return in a short time. But our Apex Profit Alert system does better.
It uses a trading vehicle that allows us to turn that 12% gain on VALE into a 150% windfall.
When VALE’s bounce is complete, it’ll be part of a longer-term AMP that will send the stock down toward $9 per share in the months that follow.
And I can show you how to capitalize on both moves.
Make Money Before and During VALE’s 30% Stock Price Decline
The price of VALE has not fared well this year.
The stock has been in a downtrend since it suffered production outages when Vale’s Feijão dam in Brumadinho, Brazil, busted open on January 25.
Investors figured the company couldn’t capitalize on high iron ore prices. So, the price of VALE stock trended down.
Iron ore is the chief ingredient in steelmaking.
Demand for steel is on the decline because economic growth in China — the world’s largest steel producer and consumer — is slowing.
Auto sales in China, for example, have fallen for 15 consecutive months … and carmakers use a lot of steel.
Plus, after the price surge earlier this year, iron ore costs more, which cuts into steelmakers’ profits. New rules and regulations on China’s steelmakers don’t help.
The prospects remain dim for steel and iron ore.
But most of the gloomy forecasts are old news. Contrarian investors should perk up.
We can use what our Apex Movement Patterns are telling us … before the crowd catches on.
Trade VALE: Triple-Digit Gains in the Months Ahead
You can buy shares of Vale SA (NYSE: VALE) for the chance at a 12% return before December.
Or you can do what I like to do: Buy call options on the stock for the chance to make more than 100% in that same amount of time.
Call options are a leveraged bet that an underlying stock — VALE in this case — will rise in value.
Once VALE’s rally has finished and you’ve profited with call options, you can turn around and buy put options.
Put options are a leveraged bet that an underlying stock will fall in value.
Most investors prefer not to “sell short” a declining stock. Short selling requires investors to open a margin account. And it can be risky.
Buying put options is a nice alternative because of the small capital requirement and limited risk.
Click here to learn more about using AMP waves to turn small moves in a stock into monster gains.
In the meantime, stay on top of this trade idea. And stay tuned for updates about VALE’s price patterns.
I want to hear from you.
Leave a comment below and let me know if there are any charts or topics you’d like me to cover.
Good investing,
John Ross
Editor, Apex Profit Alert
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