Two major events happened across the western hemisphere this past week that catapulted many broad based indexes to higher levels: One was the EU Zone acceptance of "unlimited bond buying" process across the troubled EU Zone economies to bring bond yields down. The other, more positive but less news-worthy in current scheme of things, is the strong ISM Services data logged in the US.
Both these events above are likely to put in motion a varied range of economic actions that can propel further economic progress in various economies in the Europe and the US. In these circumstances is it any surprise that SLX - Market Vectors Steel ETF - shot higher by 7.85% in strong above average volume. The ETF is still below its long-term key 40-week SMA but this week's strong price action causing a robust BIR Rating of +56 is noteworthy from our point of view.
The weakness in the US$ is also causing metals and commodities to spike up and to some extent is likely to have contributed for this week's meteoric rise in SLX's price. With price below key long term averages the ETF is technically not out of weakness zone yet, but some contrarian-type investors may start to take note especially with more stimulus in the works that can spur various economies to create more demand for the much needed steel.
We are hence closely tracking SLX as a bottoming process seems underway from a technical perspective.
Good Luck and Happy Trading!