Enough of the Mushy Stuff

The indices continue to enjoy early-morning bounces this week, as futures traders seem content to buy 'em up overnight. Despite the third consecutive session with a moderately big bounce off the open, small caps in the IWM ETF for the Russell 2000 Index are far from convincing as a bull victory, as they linger just under $138 at the moment. Thus, the jury is still out as to whether stocks have put in a good low before the home stretch of summer into Labor Day Weekend. 

In the meantime, one of the top performers this morning comes from the XME, ETF for materials miners, precious and non-precious included. 

On the XME weekly chart, below, the gist of the price action has been one of consolidation since the winter 2016 major bottom, followed by the "Trump Trade" jubilation late-last year and very early this year. 

Since then, as you can plainly see, the sector has been quiet, grinding, and most of all disappointing for near-term momentum players look to rekindle the action from 2016. 

Nonetheless, this morning's surge is promising. Clearly, the XME has spent more than enough time "hugging" its 200-period weekly moving average (yellow line). The chart has the look and feel of a tight base of flag just above it. But the longer the XME leans down or hugs it, the more support loses its luster. 

So enough of the mushy stuff for XME: It's time to reignite the prior momentum into Labor Day and beyond in order to reinforce the idea that early-2016 was, in fact, a major bear market bottom leading to a new materials bull, including steels, non-precious miners, and even some precious ones mixed in.