The shares of Vale (NYSE: VALE) one of the world’s largest producers of iron ore and nickel, with operations largely based in Brazil, have gained about 5% over the last month (about 21 trading days), outperforming the S&P 500 which remains down by 4% over the same period. The recent gains are driven by a rally in prices for iron ore, which is the company’s single largest product accounting for over two-thirds of revenue in 2021. For perspective, iron ore 62% Fe CFR futures have surged from around $79 per ton in early November to levels of about $109 currently, as China eases some of its Covid-19 restrictions, potentially signaling a revival in demand for steel and steel-making inputs. China is the world’s largest consumer of steel. Moreover, the country has indicated comprehensive support measures to prop up its property sector, which has been reeling under liquidity issues and weak demand. Further, the Federal Reserve has also slowed the pace of its rate hikes, announcing a 0.5% hike last week, after four straight 0.75% hikes at its most recent meetings, as inflation shows signs of easing.
However, now that Vale stock has seen a rise of about 5% over the last month, will it continue to rally in the near term, or is a decline imminent? Going by historical performance, there is only a 54% chance of a rise in Vale stock over the next month. There were 863 instances in the last 10 years when VALE (VALE) stock saw a trailing 21-day rise of 5% or more. 466 of those instances resulted in VALE stock rising over the subsequent one-month period (21 trading days). This historical pattern reflects 466 out of 863, or about 54% chance of rise in VALE stock over the next month. See our analysis on VALE Stock Chance of Rise for more details.
Calculation of ‘Event Probability’ and ‘Chance of Rise’ using the last ten years’ data
- After moving -1% or more over five days, the stock rose in the next five days on 49% of the occasions.
- After moving -2% or more over ten days, the stock rose in the next ten days on 46% of the occasions.
- After moving 5% or more over a twenty-one-day period, the stock rose in the next twenty-one days on 54% of the occasions.
This pattern suggests that VALE stock is unlikely to see major gains in the near term.
|S&P 500 Return||-6%||-20%||71%|
|Trefis Multi-Strategy Portfolio||-7%||-23%||209%|
 Month-to-date and year-to-date as of 12/20/2022
 Cumulative total returns since the end of 2016