Sunday, December 16, 2012

Basic Materials - Showing Signs of Life

After being stuck in range tight range for most part of the year, Basic Material stocks seem to be have come to life finally. Basic Materials was the best performing sector for the week with about 1.3% gains for the week. I have a feeling we are seeing sector rotation in play. With the weakness in Technology, money is rotating into Basic Materials and Financials. Basic materials however look much stronger in terms of breadth as all sub-sectors are showing strength.  I like Steel and Coal stocks the most at this point. Here are my picks in these sectors  --

NUE - This is the setup I gave out last week. This went up almost 3% on Friday.

X - Finally broke out of the channel. Gained almost 7% on Friday alone. Near term target of $26

STLD - Another steel stock set to the break long term trend. Add now or over $14.

AKS, MT also seem to be bottoming, although the setups are not as clear.

Amongst the Coal stocks ----

ANR - In the breakout zone. The strength this time around should take it over 200SMA and into teens soon. I'll be buying some long term options here.

WLT has been showing great strength as well. First tatget $40, then 200SMA

Other stocks to watch for JOY, ACI, BTU, JRCC

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