Two Ways To Play: Steely Demand
Strengthen your portfolio in good times and bad.
According to the Financial Times, the steel industry is seeing little signs of a slowdown. Even with extremely weak demand in many U.S. businesses linked to severe problems in the housing and banking sectors, companies like ArcelorMittal (MT) still manage to sell everything it makes.
Strong demand from China continues to be beneficial to the steelmakers as well as the plummeting value of the dollar. In addition, a series of mergers amongst the top steel players have given producers greater pricing power which has led to a long period of strong profits. Professor Charles Payne wrote recently on the steel topic in BRIC Roundup.
From the Bull Pen: Those bullish MT can play the upside should the stock approach $90. If and when.
From the Bear Cave: Parabolic advances typically lead to parabolic declines. Bears looking for a downside play might see one in Cleveland-Cliffs (CLF). Buy-stops can be set above $121.
UBS Raises Metals Forecasts
Bloomberg reports UBS raised its price forecasts for gold, silver, platinum, palladium, and rhodium. In a note to clients, the firm said prices were expected to increase this year and through 2010. Gold will average $800 an ounce next year, compared to its previous estimate of $750.Silver will average $14 an ounce versus prior forecast of $13 per ounce. Platinum is expected to hover around $2,200 an ounce next year, up $100 from an earlier estimate. Palladium will almost double to $550 an ounce, and Rhodium will average $8,000, up from its previous forecast of $6,000. See Professor Lance Lewis' Golden Moment of Clarity.
From the Bull Pen: Gold bulls can play the upside using the gold mining ETF (GDX); sell-stops in the near term can be set below the 200-DMA ($47.60).
From the Bear Cave: Gold bears can use the Double Short Gold ETN (DZZ); sell-stops can be set below $26.
For more ideas in real time throughout the trading day, check out Minyanville's Buzz & Banter.
Quick Check Around the World
Asian trading closed with the Nikkei -0.13%, Sensex -3.71%, Taiwan -1.54% and Shanghai -3.09%.
Over in Europe, we find the CAC -2.58%, DAX -1.95%, FTSE -2.43%
As of 8:45 AM EST, S&P futures are lower -13 points to 1268, and Nasdaq futures are down -19 points to 1826.
A Look At Commodities
In commodities, crude oil is higher +2.58 to 142.56. Gold is higher +4.40 to 933. Silver is up +0.220 to 17.640. and copper is higher +0.05 to 389.60.
The dollar index is lower -0.148 to 72.313.
On the Radar
10:00 ISM Manufacturing: 49.0 cons.
10:00 Construction Spending (m/m): -0.6% cons.
10:00 ISM Prices Paid: 86.0 cons.
Good luck today!
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