No Reservations for This Next Adventure

After brilliant price action and volume patterns over the past few weeks and months, the metals and miners are largely coming in today on the back of a stronger U.S. Dollar (see previous blog post).

Regarding when and where to buy a pullback in the XME, ETF for metals/miners, which houses plenty of precious miners and steels, the answer requires flexibility. 

As GDX picks up downside steam into the New York lunch, a 20-day moving average test now seems likely. And similar comments apply to the XME, the orange line on the daily chart, below. The XME 20-day is currently at $20.70 and rising. Ideally, price pulls back in an orderly way to meet the 20-day, then finds buyers to turn back up. Alternatively, price may simply "go dead" and wait for the orange line to catch up to it before resuming the march higher. And then there is the case for a violent shakeout, where the XME would knife back below $20 (presumably bringing in shorts who claim a false breakout, and scaring the daylights out of longs holding for a major bottom), only to the stop on a dime and recover. 

While the long-term commodity bear case has not yet been put out to pasture, the steady and heavy buy volume to accompany the various rallies in the miners and steels compels us to take a long, hard look at buying this expected pullback, even if we have no specific reservations about the when and the where, just yet.