Lot of investors on the sidelineWhen you have the weak market & stocks continue to make new lows some investors go on the sidelines & wait till the stock has bottomed out.
In a bear market there are chances that the stock will create numerous temporary bottoms before it actually bottoms out. Most bottoms are hard to predict. There are some technical ways or identifying a bottom but they do not work in present market conditions. Because of the long declining cycle of underlying commodity prices.
A safe entry point would be if the underlying commodity prices start to recover or the stock has formed a base.
In case of S it did start basing process at different price level but it did not hold that base.
Now media has started to talk about the bottoming process. There is no question that S offers great value at these prices. It was a bargain at $2.00 then it lost 50 % at $1.00 & now it traded at $.73 & lost another 25 % plus again. If an investor had taken a large position around $2.00 then he would have been wiped out.
Now around $.75 the down side is getting less. I am surprised that there has been no dead cat bounces which have been over due.
https://business.financialpost.com/news/mining/corporate-restructurings-take-the-spotlight-as-commodity-rout-continues
The unrelenting commodity rout continued on Monday. as Alcoa Inc. moved to quarantine the difficulties in its aluminum division and Glencore PLC’s equity was dismissed as potentially worthless at current commodity prices.
It all left investors to wonder how much longer the beating can possibly last.
With commodity prices having gone only from bad, during an especially weak summer period, to even worse this September, Monday stood out as an especially dismal day. Oil dropped 2.7 per cent, copper fell 1.6 per cent and gold fell 1.2 per cent. That weighed down the commodity-heavy S&P/TSX composite index, which plunged 374 points, or 2.8 per cent. Most of those prices have been skidding for years, due to rising global supplies, growing inventories, and concerns about China’s wavering economic growth.
“No one knows how long (the slump) is going to last. It seems like companies just have to grin and bear it for a considerable period of time,” said Ian Nakamoto, director of research at 3Macs, a Toronto wealth management firm.
Bank of Nova Scotia reported on Monday that its commodity price index last month reached its lowest level since early 2005. September’s figures promise to be very ugly as well once they are finalized.
The bear market helped convince Alcoa to take an extreme step to unlock shareholder value. An economic bellwether for more than 100 years, the company said it would split apart its aluminum production business from its value-added manufacturing unit, which enjoys much higher margins.
The move highlights how little value there is currently in Alcoa’s core aluminum business, with prices currently mired at just US70¢ a pound, the peak of more than $1.20 now just a distant memory from 2011. Around half of all global aluminum output is thought to be losing money at these price levels.
Meanwhile, Anglo-Swiss commodity giant Glencore PLC, which was widely viewed as having the smartest management team in the industry, is now in so much trouble that Investec analysts warned its equity value is zero if commodity prices remain at these levels. Glencore is in the midst of a US$10-billion debt-reduction plan, but even more restructuring may be required to right the ship.
Canadian resource companies have also been crushed by the recent downturn. Nickel miner Sherritt International Corp. has sunk into penny-stock territory, with its share price dropping 75 per cent since early May. First Quantum Minerals Ltd.’s shares have also lost three-quarters of their value in that period. Shares of Teck Resources Ltd. have plunged 70 per cent since the spring, and the company also lost its investment-grade credit rating.
Alcoa’s was the only major commodity stock that performed well on Monday, as investors welcomed the restructuring plan. That might encourage other resource companies to look at creative ways to restructure their businesses to unlock value. But experts noted that Alcoa is a relatively unique case, and most firms are not diverse enough to take the same radical step.
For most resource companies, the main options on the table are more of what they have been trying to help ride out the storm: primarily, capital spending cuts, project deferrals, cost reductions and mergers.
“(They) have to keep a clean balance sheet and live to fight another day,” Nakamoto said.
Still, more sanguine players noted that the severe acceleration in the downturn could be a sign that the market might be getting closer to at last finding a bottom.
“It feels as though we’re getting closer to the capitulation in the market where you should start to see things stabilize and recover,” said George Topping, chief executive of Wolfden Resources Corp. and a former equity analyst. “It’s always darkest before the dawn.”