XME - S&P Metals & Mining ETF
Profile: (FUND SUMMARY) The investment seeks to replicate as closely as possible, before expenses, the performance of an index derived from the metals and mining segment of a U.S. total market composite index. The fund uses a passive management strategy designed to track the total return performance of the S&P Metals & Mining Select Industry index. The index represents the metals and mining sub-industry portion of the S&P TMI. As of September 30, 2007, the Metals & Mining index was comprised of 25 stocks. It is nondiversified.
Trading plan:
We will be adding the ETF XME (metals and Mining) at or around the open today.
A full justification will follow later.
Regards,
Update:
The basic idea of adding XME to the Diversified Portfolio, is to increase a bit our exposure to the Metals and Mining sector using a well diversified basket of stocks.
The XME ETF is composed by many solid companies within the sector, here some examples of its current holdings that you can find in their factsheet (http://ssgafunds.com/fund_doc/fund_doc_20060525_092847/ETF_XME.pdf):
- FCX (Copper and Gold)
- AA (Aluminium)
- NEM (Gold)
- NUE (Steel and Iron)
- X (Steel)
- BTU (Coal)
- CNX (Coal)
- STLD (Steel)
- etc, etc
Most of these charts are long term bullish, some reaching new highs, some consolidating recent highs but most of them with solid bullish trends in place.
Also, following the same line of thought posted by Aussietrader on the GLD topic (http://www.3stocksonfire.org/trading/index.php?topic=11448.0), we expect Gold to reach new highs after this long consolidation period, probably other metals will follow this likely move in Gold, so XME looks attractive in this context.
Now about technical analysis:
XME chart is bullish in all time frames, a few days ago it reached a new all time high. Current ascending support at $87.5 and 50EMA at $87. We're using a stop slightly below April's relative high of $82.72 and try to ride this uptrend if possible.
Trading Plan:
Hold XME with a stop @ $82
XME stopped yesterday @ $82
A big sell-off in steel related stocks drove XME to a huge black candle breaking both the ascending support and the 50-EMA.
This trade was desolately quick...