The Steel ETF (SLX) is leading the stock market on Monday with a 10% gain in early trading. Notice that this gain is simply extending an existing trend. In other words, chartists would have done just find by looking at the chart and ignoring the news. Notice that SLX surged from mid January to late February and then embarked on a zigzag advance the last eight months. More recently, SLX corrected with a falling channel/flag in August-September and broke out in the second half of September. This breakout triggered the bullish signal that is active right now. SLX moved above its summer highs in October and hit another 52-week high today. The indicator window shows the SLX:SPY ratio bottoming in January and moving higher all year. This price relative also hit a new high to confirm relative strength in steel stocks. This is a group we want to put on our radar for pullbacks and bullish setups in the coming weeks and months. Note that steel stocks account for 52% of the Metals & Mining SPDR (XME).
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Thanks for tuning in and have a great day!
--Arthur Hill CMT
Plan your Trade and Trade your Plan
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