The bullish sentiment on metal stocks has grown to a roar. Many of these stocks have soared 50 to 100% in recent months with some going even higher. Over the first couple days of the new year, new money has been thrown at the markets. This new money has looked for easy profits thus chasing metal and other commodity plays. While this pushed these stocks up the first day, it appears the buying is quickly drying up. Many of these plays are and will be amazing shorts in the days and weeks to come. Yesterday, to my members, I noted that Southern Copper Corporation (USA) (NYSE:SCCO) had a topping tail in place. This was a sign of a bigger pull back to come. I told them to let it gap higher today and short it. Sure enough, Southern Copper opened at $49.99. It has quickly fallen to $48.73 for big profits already. It most likely has more downside to go as well. The two other stocks I gave to my members as shorts were United States Steel Corporation (NYSE:X) and Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX). Both these stocks have fallen nicely today as it looks like the craze and new year money flow is subsiding.
Always remember, when the hype grows to a crescendo, go the opposite way. Look at the charts and match the charts up as well. Topping tails on stocks that are 50-100-150% are ideal candidates for a pull back and should be taken. The money is there to be made and it is not hard to make it. Learn the rules and signals.
Gareth Soloway
InTheMoneyStocks.com
