When looking to put on a short term trade, I look for a several factors to line up in the direction of my original bias. The more confirmation we have, the better in terms of putting on a trade with a directional bias. Since the election of the current President, I started watching this group and admittedly have missed a substantial run up. However, the sector has recently pulled back, giving us what I think may be a good opportunity to jump in.
The Metals And Mining Sector is probably best played through the fairly liquid ETF $XME. Here is a list of the top holdings of the group:
From a technical perspective, the $XME has had a stellar run up from about $24.50 to $35, and has recently pulled back to $31, which coincidences with the 38.2% Fibonacci Retracement of the recent rally.
It also appears that we have fallen to a level where buyers are defending…
Further still, we have the seasonality statistics on our side for the $XME in the near term. April has been the strongest month for the group, up approximately 70% of the time in the month of April, returning about 6% for the month.
I will be looking to enter a long position today. From a risk management perspective, my line in the sand is a close under $30. From there I would look to exit the trade and reevaluate. I like it long to $34 and then to make a run back towards its most recent highs of $35.