METAL STOCKS ARE RISING ALONG WITH COMMODITIES -- STILLWATER MINING NEARS 52-WEEK HIGH ON RISING PLATINUM AND PALLADIUM PRICES -- STEEL STOCKS ALSO ON THE RISE -- AKS IS US LEADER -- CLF COMPLETES MAJOR BOTTOM

PRECIOUS METALS GAP HIGHER ... With the U.S. Dollar falling to the lowest level in a year today, stocks and commodities are bouncing again. Precious metals are having an especially strong day. Gold, silver, and platinum have gapped higher and are challenging last week's highs as shown in the first three charts. That puts initial chart support for all three precious metal ETFs just below yesterday's low. Precious metal stocks are jumping as well. Chart 4 shows the Market Gold Miners ETF (GDX) gapping 3% higher. I recently showed individual gold and silver stocks that had bullish chart patterns. One of our readers asked for a platinum stock. So let's show one.

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STILLWATER MINING NEARS 52-WEEK HIGH ... Stillwater Mining (based in Billings, Montana) is engaged in developing, extracting, processing, and refining palladium and platinum. Chart 4 shows SWC trading nearly 4% higher today and challenging its June high at 8.32. A close above that level (which appears likely) would put the stock at the highest level in more than a year. The solid line is platinum which correlates closely with the stock's 2009 uptrend. The weekly bars in Chart 6 puts the stock in better perspective. [Chart 6 uses a log scale which shows percentage price changes and works better on low priced stocks]. Chart 6 shows the stock on the verge of an upside breakout, but still well below its 2008 record high near 22. The purple line tracks the price of palladium which also correlates pretty closely with the stock's direction.

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STEEL STOCKS ALSO RISING... The rising stock market and falling dollar are also giving a big boost to steel stocks. Chart 7 shows the Market Vectors Steel ETF (SLX) nearing a new 52-week high today. Its relative strength line has been rising all year. Steel is an industrial commodity. As such, it is strongly influenced by the direction of the stock market and the economy. Its relative strength ratio in Chart 8 (bottom line) shows steel stocks falling faster than the S&P 500 during the second half of 2008 and rising faster this year. Like other industrial metals, steel is a barometer of global economic trends. Right now, it's giving a message of economic strength. Like other commodities, steel is also influenced by the direction of the dollar. Chart 8 shows a clear inverse relationship between the SLX and the Dollar Index (green line) over the last two years.

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US STEEL LEADERS... Three U.S. steel stocks are rising right along with the group. AK Steel Holding is the strongest of the three shown here. Chart 9 shows the stock nearing a new 52-week high. Its relative strength line (below chart) is about to do the same. Chart 10 shows USX Steel (X) doing the same. Chart 11 shows an especially promising chart for one of the top ten holdings in the SLX. The chart shows Cliffs Natural Resources (on a log scale) breaking out of a major basing pattern extending back a year. Its relative strength line is about to do the same. Perhaps because of a falling dollar, some foreign steel stocks are doing even better than their U.S. counterparts.

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FOREIGN STEEL LEADERS ... Last Friday's market message wrote about a falling dollar favoring foreign stocks. That's certainly the case with steel stocks. The Market Vectors Steel ETF has risen 87% this year. So far, only one U.S. stock (AKS) has done better with a 2009 gain of 153%. By contrast, at least five foreign stocks in the SLX have outperformed the group as a whole (as shown in Chart 12). They include Russia's Mechtel Steel MTL (+330%), Europe's TX (+215%), and Brazil's SID (+154%), GGB (+109%), and VALE (+92). All are traded on the NYSE. Chart 12 shows all five foreign steel stocks rising faster than the SLX which is plotted as the flat zero line near the bottom of the chart. Metals aren't the only commodity-related stocks rallying. So are oil and natural gas stocks. Coal stocks are on the rise as well. More on that later.

Chart 12