ALUMINUM AND STEEL STOCKS LEAD MATERIALS HIGHER -- ALCOA AND CENTURY ALUMINUM HAVE STRONGER CHART PATTERNS -- SO DO NUCOR AND STEEL DYNAMICS

ALCOA CLEARS 200-DAY LINE...CENTURY ALUMINUM LEADS... Material stocks continue to act as market leaders.   Strong gold miners are a big part of that.    So are copper miners.  Last Wednesday' message showed the Dow Jones Nonferrous Metals Index scoring a bullish breakout along with Freeport McMoran (FCX); and Southern Copper (SCCO) not far behind'.   At the start of a new week, aluminum and steel stocks are leading the XLB higher.  Chart 1 show the Dow Jones Aluminum Index rising above its 200-day moving average for the first time in two years.  Chart 2 shows Alcoa (AA) doing the same.   The biggest winner, however, is Century Aluminum (CENX).   Chart 3 shows that aluminum producer climbing to the highest level in nearly two years.  This is happening while the U.S. and Canada are imposing tariffs on each other's aluminum imports.    Steel is also strong.

NUCOR CLEARS 200-DAY LINE...STEEL DYNAMICS HITS 6-MONTH HIGH...Stocks tied to steel are also helping lead materials higher.  Two of the group's leaders are shown below.   Chart 4 shows Nucor (NUE) rising above its 200-day moving average for the first time since January; and challenging its June intra-day peak near 46.  Chart 5 shows Steel Dynamics (STLD) bouncing off its 200-day line; and trying to clear its June intra-day peak at  29.69.  And touching a new six-month high.  Steel stocks still have a lot of work to do to improve their long-term trend.

STEEL STOCKS MAY BE BOTTOMING... Like most industrial metal producers, steel stocks are just starting to recover from years of weak performance.   The weekly bars in Chart 6 show the Dow Jones U.S. Steel Index still trading well below a falling trendline drawn over its 2018-2019 highs.  The two circles, however, show the steel index rebounding off a previous bottom formed at the start of 2016.  That raises the possibility of a major "double bottom" being formed.   An article in the WSJ this morning described a strong rebound in the price of iron ore which is used to make steel.  And most of that buying is coming from China.   That may explain the new interest in stocks tied to steel -- along with aluminum and copper.  China is also a big buyer of those commodities.