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Metal Stocks Having A Rare Bounce Day

After being crushed in recent weeks, metal stocks like Southern Copper Corporation (NYSE:SCCO), United States Steel Corporation (NYSE:X) and AK Steel Holding Corporation (NYSE:AKS) are jumping.  The fact that these stocks are getting a bounce is not surprising at all.  They have all seen massive amounts of selling in the last couple weeks.  The surprising factor is that with the market at the 52 week highs, these stocks have been sold so heavily prior to the bounce today.

The recent selling in these stocks makes me pause and just wonder if the recovery is all the markets think it is.  Common sense dictates a recovery would be headed by a stock like Southern Copper Corp or U.S Steel.

When all is said and done, we will have to watch and see what type of bounce these stocks get.  My thought process initially is to look for a bear flag bounce on them and then look for more downside.  As they say, the trend is your friend.  Should they eclipse the January highs, continued upside is likely.

Gareth Soloway
Chief Market Strategist