5.12.14: Commodity Stocks Had a Good day – Some We Own

Alcoa (AA): +4.23% today on average volume

Freeport (FCX): +2.89% on average volume

Peabody Energy (BTU): +2.41% on 2(x) average volume

US Steel (X): +3.77% on average volume

KOL, the coal ETF was up 2.47% on 2(x) average volume

SLX, the Steel ETF, +2.98% was up on heavier-than-average volume today.

SP 500 +0.97% while GLD and SLV, were so-so.

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Normally we don’t put out a note┬álike this to readers, but this has been the trend all year. Commodity groups were strong almost from January 1 forward, as last year’s winners were taken out to the woodshed. The CNBC FastMoney crowd is hammering the growth stock rotation, but for a lot of these companies, the underlying fundamentals haven’t changed. We are seeing an old-fashioned rotation.

We are long all of the above names for clients, although I’m sure other names and sectors did well today too.

The XLE, the integrated oil ETF was up just 0.70%. (no exposure).

Coal looks to be the sleeper sector for 2014. The stocks and sector were completely out-of-favor at the end of 2013, given the political sentiment. It may be attracting money simply from a contrarian sentiment perspective.

My own opinion is that this lasts until late summer, 2014. We would likely be sellers and rotating into other sectors for a “traditional” 4th quarter rally, i.e. Financials, Tech, Retail, etc.

Thanks for reading.

Trinity Asset Management, Inc. by:

Brian Gilmartin, CFA

Portfolio manager

 

 

 

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