5 Metal and Mining Stocks for Short Term Consideration

Perhaps it’s time to put on the contrarian hat and revisit metals and mining stocks. Aside from the macro tide that could be turning against the sector in the long-run, the near term is looking more and more like a blow-off top could be underway. The group has had the wind at its back with a declining dollar and surging demand in emerging markets, but with a coordinated defense from further declines in the Dollar underway by the Treasury and Fed, that tailwind has been neutralized.

Furthermore, record breaking prices after a parabolic run in these stocks since the start of 2008 is leading to what PhD-laden economists like to call “demand destruction”. Although that term is more applicable to oil, there are similarities in metals attributable to substitution. Stock prices have gotten way out in front of earnings growth for now, and although setting up short trades would be counter to the primary long-term uptrends, in the near term stock has been liquidated by institutional holders that won’t return to the bid for some time. As the June 30 mutual fund redemption deadline approaches, these are the stocks the funds will tend to be unloading in preparation to meet redemptions. Remember, June 30 is the first available redemption following the blood bath in March.