All of the action, in its totality, since early March 2017 has
chiselled out a rounded, “cup and handle”-type accumulation formation
that is putting increasing upward pressure on resistance lodged between
32.64 and 33.42. If hurdled and sustained, this will trigger powerful
upside technical potential that projects to over 36.
We added the XME to our Portfolio on September 29 at 32.29 and last week, after early weakness in keeping with the overall pressure on the major indices Thursday morning, XME put in a key upside reversal day which was then followed by a gapping up on Friday morning, closing strong at 33.15.
That 2-day upside thrust, which pivoted off the rising 20 DMA (32.49) as well as off nearest trend line support from the Sep 22 low of $31.38 likely derived strength from the steel sector after the STLD (Steel Dynamics, Inc) upgrade to Overweight from Sector Weight, with an analysts consensus price target of $44 price target (up from $38).
This was mainly due to Steel Dynamics management making positive comments after its recent earnings report on October 18 that the U.S. steel market has bottomed, and they are bullish about the near term steel pricing. Although foreign dumping of steel and other industrial metals continues to be problematic for certain producers, which is on the radar of the Trump Administration, continues to work towards levelling the playing field against foreign competitors who receive support from illegal subsidies.
With this latest move, XME is attempting to move through its 8-month resistance line, which cuts across the price axis near $33.19. This XME’s third attempt to jump that line since Sep 9 and given the juxtaposition of the rising momentum indicators, a significant breakout from the larger rounded accumulation pattern likely is already in motion.
Purely from an event-driven perspective, earnings from other producers like NUE, X, MT, FCX, ATI, CNX are due out within the next couple of weeks, and should provide the XME with some event-driven directional catalysts.
From a market-psychology perspective, we believe that such a move will be directly related to renewed prospects for that long awaited Trump Growth Agenda (tax cuts, tax reform), and the resumption of the “Trump Trade” that propels the cyclical and industrial names to the upside (industrial miners and manufacturers included).
We added the XME to our Portfolio on September 29 at 32.29 and last week, after early weakness in keeping with the overall pressure on the major indices Thursday morning, XME put in a key upside reversal day which was then followed by a gapping up on Friday morning, closing strong at 33.15.
That 2-day upside thrust, which pivoted off the rising 20 DMA (32.49) as well as off nearest trend line support from the Sep 22 low of $31.38 likely derived strength from the steel sector after the STLD (Steel Dynamics, Inc) upgrade to Overweight from Sector Weight, with an analysts consensus price target of $44 price target (up from $38).
This was mainly due to Steel Dynamics management making positive comments after its recent earnings report on October 18 that the U.S. steel market has bottomed, and they are bullish about the near term steel pricing. Although foreign dumping of steel and other industrial metals continues to be problematic for certain producers, which is on the radar of the Trump Administration, continues to work towards levelling the playing field against foreign competitors who receive support from illegal subsidies.
With this latest move, XME is attempting to move through its 8-month resistance line, which cuts across the price axis near $33.19. This XME’s third attempt to jump that line since Sep 9 and given the juxtaposition of the rising momentum indicators, a significant breakout from the larger rounded accumulation pattern likely is already in motion.
Purely from an event-driven perspective, earnings from other producers like NUE, X, MT, FCX, ATI, CNX are due out within the next couple of weeks, and should provide the XME with some event-driven directional catalysts.
From a market-psychology perspective, we believe that such a move will be directly related to renewed prospects for that long awaited Trump Growth Agenda (tax cuts, tax reform), and the resumption of the “Trump Trade” that propels the cyclical and industrial names to the upside (industrial miners and manufacturers included).
No comments:
Post a Comment