Thursday, October 05, 2006

Look at XME !!

A mere one day after I mention that XME at 39.96 could be cheap on October 4th. Today, October 5th, the entire metals sector goes wild and rockets up 5.23% in a single day.

Big drivers for the sudden jump metal stocks include bullish comments about US Steel (X) and talk of a takeover of British Steel (CGA) by Tata Steel. Excitement about steel spread to Nucor (NUE), AK Steel (AKS) which may successfully deunionise once of its plants, and Reliance Steel & Aluminum (RS) all going up about 5.5% each. Bullish comments about copper demand (staying high) and future prices (not getting cheaper) from Morgan Stanley pushed Phelps Dodge (PD) and other copper miners up.

The rally wasn't just limited to the big famous names either. Fairly obscure names such as Carpenter Technology (CRS) as well as Platinum/Palladium miner Stillwater Mining (SWC) were also up strongly. Pretty much every single name in the SPDR Metals and Mining ETF (XME) was up 5% today. The metals rally even spread to the gold miners with the Market Vectors Gold Miners ETF (GDX) up only 2.19% for the day.

As this chart of five days trading of the Goldman Sachs Natural Resource ETF (IGE), SPDR Oil Gas Exploration & Production (XOP), Gold Miners (GDX) and Metals and Mining ETF (XME) demonstrate: all natural resources are not alike and energy is not the entire story.

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