FREEPORT MCMORAN AND SOUTHERN COPPER RISE WITH PRICE OF COPPER -- SILVER SHARES SURGE WITH THE COMMODITY -- SILVER STANDARD RESOURCES AND SILVER WHEATON NEAR UPSIDE BREAKOUTS -- FIRST MAJESTIC SILVER SURGES IN CANADA -- TORONTO STOCK INDEX LOOKS STRONG
COPPER SHARES SURGE ON RISING PRICE OF COPPER... Money continues to flow into shares tied to industrial and precious metals. Copper shares are rising with the commodity. Copper is up nearly 2% today and 13% from its January bottom. Chart 1 shows Freeport McMoran (FCX) surging 7% to reach the highest level since November. The big copper producer recently cleared its 200-day average. FCX is also the day's biggest gainer in the Materials SPDR (XLB) which just recently cleared its fourth quarter high. Chart 2 shows Southern Copper (SCCO) on the verge of a new 2016 high. That stock recently rose above a falling trendline drawn over its May/October highs to turn its trend higher. The copper stock is also well above its 200-day. It's 50-day average may be about to cross over its 200-day average. Silver shares are doing even better.
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Chart 1
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Chart 2
SILVER SHARES SURGE WITH COMMODITY... Silver prices are on a tear as are shares tied to them. Chart 3 shows Silver iShares (SLV) rising more than 4% today to a new ten month high. Last Wednesday's messsage showed the Global X Silver Miners ETF (SIL) reaching the highest level since May. That mining ETF is up another 7% today and trading at a new 52-week high (top of chart). Previous messages have shown or mentioned a number of leading silver stocks that have reached 52-week highs including Pan American Silver (PAAS), Coeur D Alene Mines (CDE), and Hecla Mining (HL). Here are two that haven't done that yet. Chart 4 shows Silver Standard Resources (SRRI) moving up to challenge its October high. An upside breakout appears likely. Chart 5 shows Silver Wheaton (SLW) nearing a ten-month high after clearing a falling resistance line from 2014. The 50-day averages for both silver stocks have cleared their 200-day average which is another bullish sign. Silver is getting a double boost from its role as an industrial as well as precious metal. I've mentioned several times that stocks and currencies of commodity producing countries are getting a big boost from rising commodities. Canada is a good example of that.
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Chart 3
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Chart 4
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Chart 5
FIRST MAJESTIC SILVER HELPS LEAD CANADA HIGHER... The Canadian stock market is heavily influenced by the direction of energy and mining shares. Right now, it's being pulled higher by both. Several of the top performers in Toronto today are miners. Chart 6 shows First Magestic Silver Corp. (FR.TO) surging 10% today on the Toronto Stock Exchange. Given Canada's role as a major commodity producer, it stands to benefit from continued buying in energy and metal shares. And it is. The weekly bars in Chart 7 show the Toronto Composite Index ($TSX) trading at the highest level in six months. Its 6% gain since the start of the year makes it one of the world's best performers. The TSX has cleared its 40-week average and appears headed for a test of its October high near 14000. Momentum indicators look bullish. The 14-week RSI (top of chart) has risen above its 50 line for the first time in a year. Its weekly MACD lines (below chart) have also turned up. The MACD histogram bars (which plot the difference between the MACD lines) are the most positive in more than two years (green circle). In addition, the Canadian Dollar (green area) has just risen to the highest level since last summer. A rising loonie is usually good for Canadian stocks.
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Chart 6
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Chart 7
OIL SERVICES ETF CLEARS 200-DAY LINE... The Energy SPDR (XLE) recently climbed above its 200-day average and stayed there (thanks to yesterday's upside reversal). The daily bars in Chart 8 show the Market Vectors Oil Services (OIH) moving over its 200-day line today for the first time since September 2014. The OIH recently cleared a resistance line drawn over its May/November highs. Last Tuesday's message showed Schlumberger (SLB) clearing its 200-day line. SLB is the biggest holding in the OIH. Halliburton is the second biggest holding. Chart 9 shows Halliburton (HAL) turning up us well. That increases the odds for higher energy prices.
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Chart 8
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Chart 9
U.S. DOLLAR CONTINUES TO WEAKEN... Part of the surge in commodity prices, and stocks tied to them, is the falling dollar. A falling dollar usually produces higher commodities. Chart 10 shows the PowerShares Dolllar Index (UUP) trading near the bottom of its trading range going back to last spring. Its 50-day average has fallen below its 200-day (red circle). The UUP is in danger of falling below last summer's lows. That would be even more bullish for global commodity assets.
