According to our data, the Nucor share achieved an average monthly return of 12.1%
On Wednesday, US President Joe Biden’s $ 2.3 trillion infrastructure bill received 58% approval from Americans in a new CBS poll. If there is one area of American life that can draw on bipartisan support, it is its infrastructure; The survey also found that at least 3 in 4 are in favor of spending extra federal money on five investment areas when asked generally without Biden’s name or either party. These include roads and bridges, water pipes, home care for the elderly, broadband internet in rural areas, and building public schools.
All of this is a lengthy way of saying that the infrastructure bill has a chance of getting expediently, or at least a compromised version, through Washington DC. When polls like this came in, copper fell $ 10,000 on Thursday, and iron ore prices – an integral part of steel – hit a record high. Then the question arises whether these goods can still be sold. At the very least, we’ll highlight a few stocks that could benefit from this commodity super-cycle.
Nucor (NUE) and Steel Dynamics (STLD) recently flashed bullish signals on the charts. NUE and STLD have both reached record highs. According to a study by Schaeffers Senior Quantitative Analyst Rocky White, these recent highs lie amid historically low implied volatility (IV) – a bullish combination for both stocks in the past.
White’s study shows that there have been two more times in the past five years for both stocks that the stocks traded within 2% of their 52-week high, while their Schaeffer Volatility Index (SVI) was in the 20th percentile their year was range or lower, as is the case with a NUE SVI of 31%, which is only in the fourth percentile of its 12-month range, and STLD’s SVI of 35%, which is in the lower percentile of its 12-month range Range.
According to these data, after these signals, Nucor stock achieved an average monthly return of 12.1% and was higher both times. For Steel Dynamics, the stock achieved an average monthly return of 9.1% and a positivity rate of 100%. For both NUE and STLD, moves of similar magnitude would push both stocks to new record levels.
Biden’s bill could also mean that copper – which is up nearly 300% year over year since Wednesday – could receive some of that legislative tailwind. Large amounts of copper are required to rebuild modern infrastructure and energy systems. Big copper speculators are cooling off even as the metal advances, according to a chart curated Wednesday by Schaeffer’s Senior Market Strategist Chris Prybal. This means that this latest copper rally is not being backed by new acquisitions, which underscores its technical tenacity.
Bernie Schaeffer’s subscribers Chart of the week received this comment on Sunday May 2nd.