Over the last couple of days, some interesting things may be starting to happen in two sectors.
Metals & Mining (XME) and the gold miners (GDX) may be starting to telegraph a big move higher. We have seen a few false starts and fakes outs in both these sectors over the last six months, but maybe this time is different.
After a 20% correction from the January highs, XME has managed to climb above all of its important moving averages. XME has climbed above its 20, 50, 100 and 200-day simple moving averages. Sometimes that can be a signal that the worm is turning. If so, there will be some money to be made. Think of names like CLF, AA, CENX, FCX etc….. Also, a deep base has been forming.
GDX is also interesting here. As you can see in the chart below it is flagging at downtrend line resistance. A move above that line with good volume could signal a key breakout.
Also, remember bankrupt coal??? Today KOL quietly made two- year highs today. See the weekly chart below. Now that’s a hell of a base. I think BTU and ARCH look good in this space. Demand is increasing and the Chinese are still burning that black rock like nobody’s business. Also in the 13-F filings that I reviewed this quarter, almost every major hedge fund took sizeable positions in BTU, so something to think about.
Rotations in the market are always happening. Let’s see if the worm is turning on these three. My out on a limb thought is that maybe technology starts to get sold as money rotates here, we’ll see.
$KOL $GDX $XME $BTU $ARCH $CLF $FCX