Hold My Beer While I Look for a Bottom in Steels

Thanks, in part, to an upgrade by Deutsche Bank this morning, AK Steel (AKS) is leading the steel sector in a long overdue snapback rally as we speak. 

For a while now, steel stocks have disappointed not only dedicated steel/materials bulls but also those who were adamant about the "Trump Trade" prevailing in an endless series of wins for longs. But as we know the market loves to throw a wrench in the best laid plans. And the Trump Trades has been no exception with the vast array of sectors involved in it having suffered correction in recent months. 

Still, and much like other non-precious materials/miners such as CLF and others in the XME ETF, it is worth noting that steels did not entirely give up the ghost of their "echo" or follow-up bear market which began in 2011 as a sequel to the 2008 drubbing. 

As evidence, consider a multi-year look at the SLX, steel sector ETF, below. 

Note how the rally in materials miners beginning in early-2016 broke the steel ETF up and out of the echo bear market falling price channel. Since then, as tedious, frustrating, annoying, unfulfilling, and puzzling as the price weakness may have been since the winter months of this year, price has remained above the channel breakout. 

If buyers can take advantage of the sentiment giveback caused by this price action and rip steels higher for a fresh rally, it will add credence to the idea of a new bull run on a long-term scale for steels and likely materials miners, to boot. 

In other words, the stakes are incredibly high for steels and miners this summer and into the back half of 2017--Will it be another dead money period for commodities or the dawn of a new day? 

First things first, and seeing the likes of AKS MT STLD X recapture their respective 200-day simple moving averages would be a good start.