Uranium & Steel Stocks Rise On Nuclear Build-out

Whoa, Nellie! Lotsa’ action in the market–where to start…

1. Are the bulls ready to take a rest? The S&P 500 (SPX) made another run at a new high but a late day sell-off put the kibosh on that. As Scarlett O’Hara famously said: “Tomorrow is another day,” but contrarian market internals (low volatility, rising Trin, low negative VWAPs) are suggesting that tomorrow’s market may not see the bullish action that it enjoyed yesterday. I wouldn’t be surprised if Friday’s market ends in the red.

2. Steel stocks are heating up. The Steel ETF (SLX, $34.78) has been rising off a double bottom put in a month ago. The stock gained nearly 5% on heavy volume yesterday but that wasn’t close to how some of its constituent components fared. Many gained in the neighborhood of 4%-9% on massive volume. Managing to break resistance levels yesterday were the following issues: Reliance Steel (RS, $62.69), Companhia Siderugica (SID, $2.31), and Usinas Siderurgicas de Minas (USNZY, $2.03). Close to breaking out are the following (by symbol only): SID, PKX, X, MT, NUE. This industry group has been suffering for a while and a follow-through in yesterday's rally might be a great entry point for potential big gains.

3. Yesterday’s rally in steel stocks could be a by-product (at least in part) of the surge in uranium and nuclear energy stocks. According to a recent article appearing in Forbes, India, China, and Japan are building out their nuclear power infrastructures and this is bullish for both uranium and steel (as steel is a major building component of nuclear power plants). The Uranium ETF (URA, $11.95; Dividend Yield = 4%) has jumped in the past two days on extremely heavy volume. It’s bumping up against $12 resistance and judging from the recent buying strength, it probably will have little trouble pushing above it. Four days ago (on 4/20) I alerted my subscribers to the breakout in Uranium Energy Corp (UEC, $2.41). Since then, it’s jumped nearly 30%. Other players in this area are Energy Fuels (UUUU, $5.42), UR Energy (URG, $1.03), Uranerz Energy (URZ, $1.29), and the elephant in the room Cameco (CCJ, $17.27).