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Bullitt

What About the Base Metals?

Rating: 3 votes, 2.33 average.
I know the precious metals get all the glory, but I thought I'd take a look at the base metals this weekend. Unlike precious metals, base metals are actually used to move the economy, create jobs, and raise GDP. The charts below will show that this economy is in dire straights as fewer and fewer stocks choose to partake in this rally.

Before moving to the charts, here's a little something for the gold bugs to ponder. With gold's primary use being jewelry, who will buy jewelry for their mistresses and misses when the housing bubble continues to slide? Figure most of the buying for glitter was with HELOC's and free money to the 99 weeker's. I'm with Mike Sorrentino on this one. Gold bugs have a situation on their hands. And the ones who buy gold because so and so on CNBS said retail investors should allocate 2-3% to precious metals..... Seriously, besides helping your broker make commissions, what is 2-3% going to do for your portfolio?

Alright, on to what matters. Not Molybdenum, Gold, Silver, Platinum.... but pure, solid metal companies that produce Steel.

First up, the Steel Index, clearly diverging from the S&P's uptrend. The steel bulls could call for a rising up trend and test of resistance, but steel should be leading the way, not the S&P 500.
Buy and Hold vs. Trading-steelindex-png

Next, Nucor. Same story, same divergence.
Buy and Hold vs. Trading-nue-png

Now it starts to get interesting. Arcelor Mittal Steel gapped through support and isn't looking too promising. Before you get excited with its uptrend with the S&P, notice how far it is from the April high. With the gap, it is now diverging from the S&P September uptrend.
Buy and Hold vs. Trading-mt-png

US Steel isn't looking any better. Big up day, but most likely short covering as big resistance still lies ahead.
Buy and Hold vs. Trading-x-png

Bonus chart. Much of what takes place on wall street, us retail investors can't touch- you know, the secondary markets, the preferred shares, the Fed injections. TED spread is a nice gauge of the credit market and we all know that credit has been the only driver of the economy the past 20 years or so. TED Spread should be going down like the $VIX when the market rises, but lately that hasn't been the case.
Buy and Hold vs. Trading-ted1-png

One more bonus chart, but I can't take credit for this one. Anybody remember those problems in Greece?
http://blogs.stockcharts.com/dont_ig...-equities.html

That's all for this week. Take care.

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Comments

  1. Steel_Magnolia's Avatar
    Excellent points, 5 star job as always. I owned DBB for a while but it didn't go anywhere. I still own CEF but not for long. But molybdenum is fun to say isn't it?
  2. Bullitt's Avatar
  3. fedgolfer's Avatar
    good stuff on the metals, bullitt!

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