PPR - Vale, S.A. ADR (VALE) Follow-Up

Published : September 24 2010 at 7:40 ET

Yesterday's PPR piece on VALE did not see the stock move appreciably higher, but we noted that the pocket pivot buy point on VALE is still in force. Today we discover why the stock was flashing pocket pivot buy points on Tuesday and Wednesday of this week as VALE has this morning announced 1) an increased dividend above market expectations 2) a $2 billion share buy-back, about 5% of the float, and 3) a new listing on the Hong Kong Exchange. As we saw in NFLX this week, pocket pivot buy points are often clues of impending news in a stock. NFLX flashed its pocket pivot points 1 and 2 days before it announced on Wednesday that it was commencing service in Canada. VALE flashed its pocket pivots just before this news was released, so we can surmise that the action in VALE over the past few days was in fact a clue of positive news. While VALE has a Relative Strength of 61, we don't view this as a problem, since pocket pivots are often a clue of a stock's early resurgence to a higher RS rating.

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