Steel

The powerful short covering bounce in the S&P steel index is starting to fizzle. The latest upleg had been driven by a surge in Chinese domestic steel prices. That, combined with news that the country plans to reduce steel capacity in the coming three to five years, was enough to send shorts…

The heavily-shorted S&P steel index has enjoyed some relief of late, as short sellers were given an excuse to cover when China announced it would attempt to shut roughly 10% of its productive capacity in the next few years. While that is a necessary development to eventually rebalance…

Confirming indicators still do not validate the oversold rally. Fade the materials sector bounce, by selling steel down to underweight.

A stunning 9.9 million-barrel build in U.S. oil inventories this week failed to arrest the upward climb in prices.