SLX Update

Well, SLX has reached an important support level at around $75. In fact, a little over a year ago, in July 2007, we saw some resistance around the same level. (Proving Chris' aphorism: "Previous resistance becomes new support and vice versa.")

We had a negative divergence from the MACD at the end of last year (blue lines over MACD and above the period marked "Consolidation Phase") and in March through May of this year we saw the MACD edge up slowly while the price of the security went from $90 to $115, before the MACD sell signal occurred. In March when we saw the same signal, it was a burp as the ETF trended higher, but this time it crossed the zero line and kept going.

Now I know we don't usually pay attention to volume, but notice how the last downtrend caused a tremendous increase in volume. Maybe buyers bought in expecting another turn up, or maybe they anticipated a deeper move down.

Regardless, everybody's going to be watching to see if SLX breaks through old support or rebounds.

The Steel/Iron BP chart recently changed columns, from Os to Xs, after hitting the 12% mark. Both BPI charts reflecting the percentage of stocks above their 10- and 30-week moving averages are in columns of Xs. And, according to the Sector Hunter calculation (whatever they may be!), the sector is on a Relative Strength Buy Signal.

SLX shares 46.9% of the same constituents as those on which the Investors Intelligence BPI for the sector is based.