This market is all about the Heavy Metal...

Hey folks,

How are all you doing? Me, I'm a little sick over here, but I'm hanging in there. I got a runny nose that rivals the grand rapids and a sneezing fit that belongs in the Guiness World Book of records. But its all good. I got a ton of Kleenex and a lot of hot stocks that I want to introduce and reintroduce to everyone.
Right now, without a doubt, my focus has shifted from Bio-Tech to Metals completely! Although there are a few bio-techs that I still like and recommend (like CELG, for instance), there is still so much going on in Metal stocks and its too good to ignore.
I will be talking about several categories of stocks (there are quite a few) and they all are important.

For instance, I will talk about Precious Metal mining companies, which will include companies that mine for Gold, Silver, Platinum, Diamonds, and Copper. I will also mention companies that mine for Aluminum, and Iron as well has companies that produce Steel and fabricate it (like BOOM). Finally, I will mention some stocks that distribute these metals and companies that manufacture mining equipment (like JOYG).

Steel Producers:
As a group, the Steel Producers have come a long way. For the most part, this group has been down for the last few months. Up until 3 months ago, the steel producers were great stocks to have a short position in. That has all changed. Currently, the group is one of the top rated, especially Technicals-wise (IBD Industry Groups). So what stocks do I like in this group? Lets take a look.

Arguably one of my favorite, and one that I currently own a small position in, is Gerdau SA ADR (GGB).
GGB has been around for quite some time (over 100yrs) and in my opinion is one of the best steel companies around. GGB closed at 18.19 (highest close ever) which also happens to be its new 52wk high! Nice close! Volume was also up, from an average of 843,000, to 1,201,000! Not bad!

Gerdau SA ADR (GGB - NYSE) 3 month chart- Current Price= $18.19

GGB has hit my first target of $18. I would like to see the stock close above $20 before I can call out a 2nd price target.














Gerdau SA ADR 1 yr chart- Displaying the Cup w/ Handle Formation


Drawing out the outline really helps the Cup with handle formation stand out. The breakout began around high the 13 to low 14 dollar range.











Tenaris SA ADR (TS) is another steel winner. But being the goliath of the steel stocks is not an easy feat for TS. Weighing in at $122.84 really puts a damper on how much one could buy of TS and it is starting to show. The stock has had quite an impressive run-up and is now in consolidation mode as it is trying to finish basing.

Tenaris SA ADR (TS - NYSE) 3 month chart- Current Price= $122.84


The current dip in TS's price should be taken advantage of by smart institutions and investors. If you have the money, buy it. And even if you can't afford 100+ shares, a few shares would be fine as well. Just don't expect it to shoot up in price over night. This is a slow, but steady process that will reward the patient investor with a top rated steel stock that has more room for growth.





Tenaris SA ADR (TS) 1 yr chart

As you can see from the 1 yr chart, TS's dip from its all time high allowed investors and institutions to rack up cheap shares. This is illustrated by the fact that the money flow continued to increase, despite the dip from the 52wk high of $144.90.










IPSCO inc (IPS) is another steel favorite of mine. It has been in rally mode for the last few weeks and looks like it has more room to run. The company is currently at $86.35 and it just hit a new 52wk high of $86.69 today as well.

IPSCO Inc (IPS - NYSE) 3 month chart- Current Price= $86.35

Although I am recommending it as a buy, I do suggest that you let IPS come down a little bit in price before you initiate a position. I only suggest this because IPS is prone to a little consolidation everytime it makes a new 52wk high (as you can see in the chart). Let it dip .50 -1.00 or more, and then go crazy with it. If you don't mind being down a little bit at first, then go right ahead and buy ASAP. Its all good.






IPSCO Inc (IPS) 1 yr chart


Looking at the chart, it seems that IPS broke out of a high handle in late October (around $60) and already has had a run up. Because of that, if you choose to buy IPS, let it come down a little and don't put too much money into it.









Nucor Corporation (NUE), is another steel heavyweight, coming in at $70.45.

Nucor Corporation (NUE - NYSE) 3 month chart- Current Price= $70.45

So far so good with NUE. Volume has picked up on the far right side and stock has reacted favorably to the increased buying.












Nucor Corporation (NUE) 1 year chart


As you can see in the 1 year chart, NUE has just started its breakout out of its base with a high-handle. You can buy at his point, or wait for a small drop, its up to you. My first target for NUE is 76.35.









If you're looking for a big cap steel stock at a discount, I suggest you check out PKX and X

Posco (PKX) is currently trading at 50.87 and is a few dollars off of its 52wk high of 57.65. Judging by the chart, it looks like PKX has bottomed out, and buying interest seems to have picked up as well. I recommend it as a buy at these levels. If you can get it at low 50 or even high 40's, that would be even better.

Posco (PKX - NYSE) 3 month chart- Current Price= $50.87

As you can see, after trading side ways for a few months, PKX is starting to poke through its 50day MA. Judging by the Money Flow, the stock has started looking oversold, so the value investors have stepped in and helped out a bit.










Posco (PKX) 1 yr chart
As you can see, the stock has new support near the 47/48 range, so a buy at 50 is not too risky!













If you're looking for an even better deal than PKX, then I suggest you take a look at United States Steel Corp (X). At 49.84, it doesn't get any cheaper with a steel company with as large of a market cap as X.

United States Steel Corp (X - NYSE) 3 month chart- Current Price= $49.84

X has started to go from oversold to Strong Buy, as institutions have begun grabbing shares after it pierced through its 50day MA.












United States Steel Corp (X) 1 year chart

Its hard to believe that the stock has plunged from over $60, down to $35. That dip is a great reminder of how risky steel stocks are. You are constantly at the mercy of price and demand. Thankfully, rising energy prices and an increase in hurricanes and China's demand, have helped increase steel prices. Take advantage of X's cheap price and buy some soon.







Some other steel stocks that I recommend:

OS
RESC
CHAP
CGA