The SPDR S&P Metals and Mining ETF (NYSE:XME) has spent the past 10 weeks digesting and correcting 60% of its May-July upleg, which sits atop a larger 157% advance off the Jan. low at 11.38 into the July high at 29.23.
As we write, XME is 5% above the rising 200-Day EMA, now at 23.28, which my work considers very powerful support in the event XME weakens further in the near term.
That said, as long as any additional weakness holds above 22.80, my intermediate-term momentum and pattern work argue for the approaching completion of the current pullback and the emergence of another upleg that extends the 2016 bull market above 29.23 toward targets of 35-37 -- and possibly to 40-42 thereafter.
Whether or not the upside prospects for XME anticipate a shift toward a friendlier political and economic environment for the miners is debatable, but the technical set-up is in place to initiate a very powerful extension to the current bull market.
