This was based on my own assessment of the whitepaper when it first became prominent. The way that transactions were formed was to build on an existing transaction in the mempool and mix the results together with the ring signatures. Looking at the coin now it appears that there's some optional (soon to be mandatory) protocol changes that will mask the output addresses, but I have not looked closer.
The Wikipedia article has two papers that draw similar conclusions about the traceability:
http://monerolink.com/monerolink.pdf
https://drive.google.com/file/d/0B7e8g-wJId8md3FYUGF0TlB5NjQ...
RingCT claims to conceal the amount, and "stealth addresses" claims to obscure output addresses, but I have not verified these claims because I'm reluctant to spend more time verifying a coin that I am skeptical about.