Trade of the Day: Breakout Targets a 25% Run in XME

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SPDR S&P Metals and Mining (ETF) (XME) — This ETF seeks to track the S&P Metals and Mining Select Industry Index. The fund is non-diversified with 52% of its assets in steel, 11% in gold, 10% in silver, 9% in diversified metals and mining, and 8% in aluminum.

S&P Capital IQ rates XME “Market Weight,” but its analysts give the fund an “Overweight” ranking in the performance analytics and cost factors categories.

The top 10 holdings in XME are Newmont Mining Corp (NEM), Hecla Mining Company (HL), CONSOL Energy Inc. (CNX), Royal Gold, Inc USA (RGLD), Coeur Mining Inc (CDE), Steel Dynamics, Inc. (STLD), AK Steel Holding Corporation (AKS), Worthington Industries, Inc. (WOR), Reliance Steel & Aluminum Co (RS) and Nucor Corporation (NUE).

XME is being recommended as a trade based on technical factors, including the oversold nature of the stocks held by the fund.

XME made a high above $77 in April 2011. By June 2013, shares had fallen to the low $30s. They spent the next 14 months climbing to a high in the mid-$40s before plunging to a low of $11.38 last month, where they appear to have established a “V” bottom.

Very high accumulation accompanied a break through the 50-day moving average on Feb. 4, and XME jumped 6.5% on Friday to a new closing high for the year of $15.25. The break through bearish resistance targets a move to the 200-day moving average, now at $19.57.

Buy XME at the current price with an objective of $19 for a projected return of 25%, plus dividends (current yield 2.8%).

XME Chart
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Article printed from InvestorPlace Media, https://investorplace.com/2016/02/spdr-sp-metals-mining-etf-xme-trade-day/.

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