Metal Health
Making the case over the last year that metal stocks deserved a place in a portfolio was a bit like making the case some years back that baseball players under 5’ 10” like Ozzie Albies, Jose Altuve, Mookie Betts, Yadier Molina, Jose Ramirez, and Justin Turner were among the best players in the game. But we think that metals stocks, along with Albies, Altuve, et. al., have earned the distinction of being in a portfolio / on any team. For example, the SPDR S&P Metals & Mining ETF (XME) is up 39% in 2021 and up nearly 80% over the last year while Altuve is already second on the all-time post-season home run list with 23 (lunch to the first person who can tell us who is the all-time leader in MLB post-season home runs).
The XME is above its upward-sloping 200-day moving average and has been consolidating since May 2020 with 60% of its stocks recording strong Technical Scores. And if we remove the precious metals components to focus on the industrial components, the % of strong Scores moves to 69% (table here).
Even more encouraging to us is the monthly version for the XME shown here. The current 7-month consolidation (pink circle), just under the ceiling of what has been a 9+ year Brobdingnagian BASE, suggests to us that the next important move for this ETF / the sector is higher.
It also is helpful for our Metal Health that the 22V Research Uranium Miners Index has strong Technical Scores across the board. We realize that many of these stocks are not “institutional” in nature, but if a nuclear energy option becomes a bigger market, as we believe, then it’s only a matter of time before these stocks enter the vernacular.
22V Research Uranium Index (top) and Relative to the Value Line (bottom)
We are also fans of two stocks that we believe should benefit from nuclear infrastructure activity – Fluor (FLR) and Rolls Royce (RR/ LN). And Rolls Royce is up nicely today (+4%) on news reported today in The Guardian.
Fluor (FLR) with 12-Month Mov Avg and Monthly MACD
Rolls-Royce (RR/ LN) with 12-Month Mov Avg and Monthly MACD
