Materials have been beaten down for years, but they’re finally starting to look attractive.
Almost every chart in the metals and mining space appears to be bottoming or starting to climb. Steel makers, for instance, have been moving sideways for the last six months after an 18-month slide. Coal producers are behaving similarly and starting to see some bullish call buying. Copper miners look even better.
These companies have been on the wrong side of the trade for the last year as the market priced in slow growth in China and then financial calamity in Europe. Both conditions are old news, but these stocks are still priced at panic levels.
One consideration is China, the world’s second-largest economy. It will probably never return to the breakneck growth from a few years ago, but all the evidence points to re-acceleration in the last two months, with electricity consumption and industrial indexes starting to improve.
— Option Monster