Since my last post 2 weeks ago, the price of iron ore has surged further from about $124 to as high as $148. It is currently at about $137. The surge is all based on hope that demand will improve, fundamentals have not improved at all.
China has just stated its intention to suppress the iron ore speculators driving up prices. Could this be the start of a sentiment shift? It is possible, though there may not be a straight one-way journey down. China did the same thing last year, and prices went down, back up and then down again. In my opinion, the fundamentals of supply and demand will matter most in the end. Thus it is best to monitor news flow pertaining to them, in order to gain clues on medium to long term price direction.
If you are itching to trade iron ore equities, in my opinion the downside risk-reward ratio is more attractive than the upside. Do note that this week the Chinese are on holiday, so the number of traders is smaller, which would imply greater unpredictability of the price action.