Active traders often look to metals and mining companies for a level of portfolio protection during times of uncertainty and volatility. As markets continue to push towards all-time highs, portfolio protection may not be a priority for many traders, but the charts shown below suggest that metals and mining stocks may warrant further scrutiny. thorough.
Key points to remember
- Breaks beyond key levels of resistance on the charts for the metals and mining sector suggest that this could be a band to watch over the coming weeks.
- Looking at the main key holdings exchange traded funds (ETF) industry offers active traders a good way to find potential candidates for their next trade.
The SPDR S&P Metals & Mining ETF (XME)
Active traders looking to gain a broad level of exposure to the metals and mining sector often look to exchange-traded products such as the SPDR S&P Metals & Mining ETF (XME). Basically, the fund comprises 23 holdings from across the sector with a weighted average market capitalization approximately $8 billion. In the chart below, you can see that the fund has traded within a defined range for most of the past year. The break beyond the resistance of the dotted line trend line in November was a clear signal that the bulls were taking control of the momentum across the sector.
Active traders are now taking note of the recent retracement to new Support of the trend line and its 50 days moving average. The recent upward move of the 200-day moving average suggests that we may be in the early stages of an extended uptrend. From a risk management perspective, followers of technical analysis will likely set their stop loss orders below one of the long-term moving averages, depending on risk tolerance, to protect against a sudden change in market sentiment.
Freeport-McMoRan Inc. (FCX)
Active traders may want to analyze top XME ETF stocks such as Freeport-McMoRan Inc. (FCX). As one of the world’s leading copper mining companies, Freeport-McMoRan is often closely tied to Infrastructure expenses.
In the chart below you can see that the price is trading within a defined range channel model. Followers of technical analysis will most likely use the ascending trend lines and the 50-day moving average as guides in determining the placement of buy and stop orders. To maximize the risk-reward of a trade, traders will look to buy near support at $25.50 and sell near resistance at the 52-week high at $32.49.
base metals are generally abundant and are used in a variety of commercial and industrial applications. These applications include copper plumbing, aluminum cans, and steel used in automotive production. Due to their abundance, the prices of base metals are much lower than those of precious metals and rare earths. Their prices react to changes in demand for the products for which the metals are used.
Carpenter Tech Corporation (CRS)
Carpenter Tech Corporation (SCR). As a leader in high-performance specialty alloy materials, the underlying demand from the aerospace, automotive, defense, energy, industrial, medical and consumer electronics industry is expected to continue to propel Carpenter Tech’s business for decades to come.
In the chart you can see that the price has recently broken out in the short term ascending triangle model and now looks set to go higher. The surge in buying interest since November has also triggered a bullish cross between the 50-day and 200-day moving averages. This bullish crossover is a common long-term buy signal used by technical analysts and often marks the start of a major uptrend.
While the markets are near all-time highs, much of the market’s attention goes to dynamic sectors such as technology. However, bullish chart patterns in sectors that seem more mundane, such as metals and mining, suggest that now could be an ideal time to focus on companies specializing in physical assets, just in case volatility spikes or falls. sudden change in market sentiment.
At the time of writing, Casey Murphy did not hold any positions in any of the assets mentioned.
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