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Kevin Grewal is the founder, editor and publisher of ETF Tutor as well as serves as the editor at www.SmartStops.net, where he focuses on mitigating risk and implementing exit strategies to preserve equity. Additionally, he is the editor at The ETF Institute, which is the only independent... More
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  • What Has Caused Steel To Shine 2 comments
    Aug 17, 2009 11:09 AM | about stocks: MT, RIO, SLX
    By Kevin Grewal, Editorial Director at www.SmartStops.net
    Over the past seven months of the year, many investors have been concerned about what has caused the recent uptrend in base metals and are pondering whether it has been fueled by real demand or has been supported by stockpiling and speculation. 
    It appears that most signs are indicating that the uptrend, especially in steel, has been caused by an increase in real demand, primarily by China. China has witnessed an increase in consumption of steel due to its jump in infrastructure and construction spending, as well as an increase in auto sales fueled by a growing economy and middle class. Many analysts suggest that this trend will continue and eventually have a domino effect and trickle down to other emerging nations like South Korea, which will further drive the demand for steel.
    In addition to this, it appears that the “cash-for-clunkers” program implemented by the Obama administration has caused an increase in the demand for automobiles domestically, which indirectly has increased the demand for steel in the U.S. Most suggest that this is just temporary; however, optimistic data suggesting that manufacturing in the U.S. is improving could potentially enable this demand to be sustained. 
    In a nutshell, it is demand that has fueled the uptrend in steel and base metals and if this global demand can be sustained the following equities will be poised to benefit from the trend:
    ArcelorMittal (NYSE:MT), which has more than doubled from a March low of $17.10 to close on Friday at $35.49.
    Rio Tinto (RTP), up nearly 100% from a January low of 79.17 to close at 158.29 on Friday.
    Market Vector Steel ETF (NYSEARCA:SLX), rebounding after witnessing a March low of 22.14 to close at 47.66 on Friday, an increase of 115%.
    When investing in these equities, keep in mind the inherent risks involved. A good way to help mitigate these risks is by using an exit strategy which identifies when an uptrend could be in trouble. According to the latest data from www.SmartStops.net, the price levels at which at upward trend could be coming to an end for the mentioned equities are: MT at $33.00; RTP at $147.64; SLX at $44.24. These price levels change on a daily basis and updated data can be accessed here.
    Themes: Silver, Base Metals, Metals Stocks: MT, RIO, SLX
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Comments (2)
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  • User 439357
    , contributor
    Comment (1) | Send Message
     
    Great Story!
    17 Aug 2009, 03:21 PM Reply Like
  • Amby
    , contributor
    Comments (7) | Send Message
     
    in India equity steel stocks have gone up 400%.. A big bublle in the making..
    26 Sep 2009, 09:23 AM Reply Like
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