BHP Billiton Bouncing Nicely for Shareholders

At the time of writing, shares of BHP Billiton Ltd [ASX:BHP] are up by 2.64%, to $33.06 per share.

Why did BHP Billiton shares do this?

BHP Billiton is considered a blue chip company and tends to move with the market. That makes sense. The ASX 200 Index is relatively flat today, down 2.9 points to 5,827.4 points:commsec bhp share price

Source: CommSec

For the past few weeks, the ASX 200 has been in freefall towards support at the 5,600 zone. That level dates back to the July 2016 high. It’s putting in a nice bounce as we speak. That said, momentum is slowing down around the 5,800 level. In that case, there’s a risk we could see another drop towards major support at the 5,600 level. If the market moves lower, BHP Billiton’s share price is likely to fall. BHP Billiton has collapsed with the overall market:commsec bhp

Source: CommSec

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The share price moved towards major support at $31 per share, where it bounced with the market. Resistance stands at the $33 per share level, where the company is trading today. If the market heads lower tomorrow, however, BHP Billiton’s share price could fall towards the $31 zone and see a technical double bottom.

What now for BHP Billiton?

There’s a good chance the share price will pull back before making its next move. We really need to see the overall market boom for the share price turnaround. That said, let’s take a look at the iron ore price ― a large contributor to BHP Billiton’s earnings:trading view bhp

Source: tradingview.com

The iron ore price has marched higher over the past two months, despite BHP Billiton’s share price falling lower with the overall market. That said, while it might pull back slightly in the weeks ahead, iron ore is booming at the moment. In that case, given iron ore is a large source of BHP Billiton’s revenue, the share price should be supported.

The bottom line: BHP Billiton’s future is mainly dependent on the overall market today, rather than the iron ore price. We warned that BHP would bounce around the $31 zone last week. This week, we’re warning that BHP isn’t out of the woods yet. Get ready ― the wheels might start reversing soon and BHP could pull back. We will track this story once a week and analyse any future developments.

Regards,

Jason Stevenson,
Resources Analyst, Markets & Money

PS: Interested in mining stocks? My free new investor report, ‘The Top 10 Mining Stocks for 2018’, does exactly what it says in the name. I look at 10 companies that could make you huge money this year, and beyond. To download that report free, go here.


Jason Stevenson is Markets & Money’s resource analyst. He shares over a decade’s worth of investing and trading experience across resource stocks and commodity futures and options. He originally studied accounting and finance at Curtin University, where he was awarded a first-class honours degree. His professional background stems across high-net-worth, top tier accounting (corporate finance, tax and auditing), and sell-side equities research. Before joining the team at Markets and Money, Jason worked at boutique firms which advised fund managers and high-net-worth clients on where to invest. Whether it’s gold, crude oil, copper or an obscure metal like vanadium, you can rely on an in-depth analysis in Markets and Money. Jason also brings you extensive macro, political and geopolitical analysis from around the world. He leaves no stone unturned when it comes to telling the truth. Jason is also the lead analyst of Gold Stock Trader, a premium service for investors serious about precious metal stocks. Websites and financial e-letters Jason writes for:


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