During the Mad Money "Lightning Round" Monday evening, one caller asked Jim Cramer about Vale S.A. (VALE) : "I think this is a multi-year move, but I do like Cleveland-Cliffs (CLF) more," replied Cramer.
Vale is the world's largest producer of iron ore, pellets and nickel. We looked at CLF on May 6 and wrote that "CLF continues to move up nicely and with the trade at $21 we can suggest raising the sell stop to $16.50 from $15.00. The new Point and Figure charts give us new targets of $25 and $33. Stay long."
Let's check out the charts of VALE.
In this daily bar chart of VALE, below, we can see the past 12 months of activity. Prices traded sideways from June through October before breaking out on the upside in early November. There is another sideways consolidation from January through March followed by further gains in April and early May. Prices have corrected this month but remain above the rising 50-day moving average line as well as above the bullish 200-day line.
The On-Balance-Volume (OBV) line shows a rise the past year with some softness this month. The Moving Average Convergence Divergence (MACD) oscillator just crossed to the downside for a take profit sell signal.
In this weekly Japanese candlestick chart of VALE, below, we can see a mixed picture. Prices are in an uptrend above the rising 40-week moving average line. There is chart support in the $18-$16 area as this was a place where prices stalled on their way up.
The weekly OBV line made a fresh high in early May but is generally lagging the price action. The MACD oscillator is above the zero line but has narrowed towards a potential downside crossover.
In this daily Point and Figure chart of VALE, we can see that the software is projecting a tentative upside price target in the $41 area.
Bottom line strategy: Aggressive traders could go long VALE closer to the rising 50-day moving average line. Risk below the bottom end of support - below $16. The $41 area is our longer-term price objective.
