The Metals and Mining Sector Is Making a Bullish Return

[Trading With Larry Benedict]( The Metals and Mining Sector Is Making a Bullish Return By Larry Benedict, editor, Trading With Larry Benedict When most stocks were tanking at the start of 2022, one sector was going through the roof. Beginning late January, the SPDR S&P Metals and Mining ETF (XME) rallied an impressive 70%. In less than three months, XME was trading at its highest level in more than a decade. However, this rally reversed sharply soon after. And although there was a counter-rally in May, it fizzled out in June. When we last checked XME [on July 13]( (red arrow in the chart below), it was trading back at its pre-rally lows. But after holding long-term support, XME is now showing promising signs of an emerging rally. So, today I want to check out how this move is panning out plus what I’m looking for from here. Check out XME’s chart… SPDR S&P Metals and Mining ETF (XME) [Image] Source: eSignal You can see how XME’s strong reversal from its April high coincided with a common chart pattern… While XME was rallying to new highs, the Relative Strength Index (RSI) made a series of lower highs. This pattern often signals a change in direction ahead. In XME’s case, declining buying momentum eventually pulled the share price lower too. That sharp move lower also bearishly pulled the 10-day moving average (MA – red line) down below the 50-day MA (blue line). [Market Wizard Who Accurately Predicted 2022 Market Collapse Has Shocking New Forecast]( On July 13, we noted there were two things XME needed to rally: - First, XME needed to continue holding the long-term support (orange line) it’s held since September 2021. - Second, a previous pattern needed to repeat. Previously, XME rallied whenever the RSI formed a ‘V’ out of oversold territory (lower grey dashed line). As you can see on the chart, both scenarios played out. Take another look… SPDR S&P Metals and Mining ETF (XME) [Image] Source: eSignal After XME held support and the RSI formed a ‘V’ (red line), XME rallied strongly. And this move could soon lead the 10-day MA to bullishly break back above the 50-day MA. Now, what can we expect from here? Well, the strong momentum that drove XME higher also pushed the RSI back into the upper half of its range (above green line). So, for this rally to take hold the RSI needs to remain in its current range. If the RSI instead breaks back below support, any rally will soon fizzle out and XME would potentially retest its long-term support (orange line). Free Trading Resources Have you checked out Larry's free trading resources on his website? It contains a full trading glossary to help kickstart your trading career – at zero cost to you. Just [click here]( to check it out. Also, I’ll be closely watching our two MAs. If the 10-day MA crosses above the 50-day MA and accelerates higher, then that’ll show this uptrend is gaining strength… as well as provide the setup for a potential long trade. But as always, even if we get our trade direction right, we need to be ready to take our profits as soon as we see them. Because in today’s market, any move can quickly turn on a dime. Regards, Larry Benedict Editor, Trading With Larry Benedict P.S. Most people wouldn’t believe you can make extra money in today’s crazy market. But my experience shows me it’s a lot simpler than you’d think. You don’t need to be a professional and you don’t need a lot of money. With my [One-Ticker Retirement Plan]( all you have to do is focus on a single ticker at a time. It breaks all the rules but can generate gains in any market. In fact, in 2008 this strategy helped me have one of the best years of my life. To see how you can start making tons of money in today’s bear market, [click here](. 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