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  • WHY BASE METALS COULD SUSTAIN FAVORABLE UPTREND 0 comments
    Aug 13, 2009 04:49 PM | about stocks: XME, IYM, DBB, FCX
    Base metals have witnessed a favorable uptrend and are most likely going to sustain this trend due to an uptick in demand and signs of a global economic recovery. 
    Most recently, the National Association of Realtors has released data indicating that the housing market could potentially be rebounding indicating that the number of homes being built is increasing. Additionally, the Labor Department has stated that unemployment levels are starting to soften illustrated by the drop in the overall unemployment rate from 9.5% to 9.4% and global demand for base metals is strengthening.
    To add to this, the federal government’s “cash for clunkers” program has been a hit with consumers and has driven the demand for new vehicles up which has indirectly driven up the demand for base metals. Lastly, from a manufacturing perspective new orders and production hit their highest levels since the summer of 2007 and a private index measuring U.S. manufacturing activity rose indicating that manufacturing is heading in the right direction.
    As long as the global economy continues to grow and recover and employment numbers continue to show some sorts of prosperity, base metals should continue to shine. 
    The upward trend in base metals can be seen through the following equities:
    SPDR S&P Metals & Mining (XME), up 98% after witnessing a March low of $20.81 to close at 41.29 on Monday
    iShares Dow Jones US Basic Materials (IYM) closing at $50.78 on Monday, up 79% from a March low of $28.36
    PowerShares DB Base Metals (DBB) rebounding nicely from its March close of $10.95 to close at $18.24 on Monday, an increase of 67%
    Freeport-McMoRan (FCX), more than doubling from a January low of $22.14 to close at $62.38 on Monday
    When investing in equities, investors must keep in mind that inherent risks are involved. To mitigate these risks, utilizing an exit strategy with up-to-date price data is vital. According to the latest data from www.SmartStops.net, the upward trend in the aforementioned equities could potentially come to an end at the following price levels:  XME at $37.17; IYM at $47.08; DBB at $17.20; FCX at $56.08. 
    Themes: Copper, Base Metals, Metals Mining, Basic Materials Stocks: XME, IYM, DBB, FCX
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