3 Heavy-Metal Stocks That Are Red Hot

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Metal stocks, long since relegated to the back seat of the Wall Street bus, are now driving. Though many rallies have come and gone over the past two years, none have lit a fire under metal stocks quite like the current one.

steel-coils-200

Source: iStockphoto

To wit: the SPDR S&P Metals & Mining (ETF) (XME) is up 24% in the past six trading sessions alone. Not to be outdone the Market Vectors Steel (ETF) (SLX) is up 28% — a pair of red-hot ascents if there ever was one.

Why the sudden resurrection in an otherwise left-for-dead industry? Perhaps credit goes to oil for finally halting its seemingly endless descent. Or, perhaps metal and mining stocks had fallen so far that everything but Armageddon was already priced into them, leaving little room for additional downside.

Regardless of the culprit, metal stocks are witnessing a short squeeze of glorious proportions. Here are three heavy-metal stocks that are red-hot.

3 Heavy-Metal Stocks That Are Red Hot: United States Steel Corporation (X)

X

Source: OptionsAnalytix

United States Steel Corporation (X) deserves the top spot in our trio of smokin’ metal stocks. The popular steel stock has doubled — yes, doubled — in price over the past month. From $7 to $14 in one fell swoop.

The moonshot has been accompanied by gargantuan volume, record-breaking in fact. I can’t find another trading session that posted the volume X stock experienced on Friday … like, ever.

Suffice it to say there’s some serious firepower backing the upturn, which makes it all the more likely the budding uptrend in X has staying power.

While I can’t advocate chasing after such an overextended move, any and all dips in X stock should be viewed as buying opportunities in the weeks ahead.

3 Heavy-Metal Stocks That Are Red Hot: Vale SA (ADR) (VALE)

VALE

Source: OptionsAnalytix

Like its predecessor on this list, Vale SA (ADR) (VALE) also doubled in value in the past month. The recovery was desperately needed, as the crushing commodity bear market had brought the Brazilian-based metal and mining company to its knees.

Something is seriously amiss when a once-$40 stock descends to the $2 mark.

Regardless of its eventual destiny, VALE has become red hot during the mad dash for metal stocks. This morning, Vale stock was closing in on $5. The surge lifted it back above its 200-day moving average for the first time in over 18 months.

Prudence dictates caution in the short run, however. Not even the hottest of hot stocks can maintain the type of ascent experienced by VALE recently. Be ready to strike, however, during VALE’s next pullback.

3 Heavy-Metal Stocks That Are Red Hot: Freeport-McMoran Inc (FCX)

FCX

Source: OptionsAnalytix

The final metal stock that’s heating up is Freeport-McMoran Inc (FCX). While FCX’s recovery has been a touch more gradual than its brethren, it deserves mention.

For starters the volume patterns accompanying the budding uptrend in FCX have been fantastically bullish. Since mid-January, nearly every instance of high volume has come during an up day.

Accumulation has been FCX’s watchword of late. Bears have uttered nary a whimper during the same time frame, illustrating a telling change in character for a stock that has long since been a prisoner in the bears’ den.

In the short run, FCX is overbought and approaching its declining 200-day moving average, which may well act as resistance. Watch for a pullback, providing a lower-risk entry in the days ahead.

At the time of this writing Tyler Craig had no positions on any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/03/heavy-metal-stocks-x-vale-fcx/.

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