Here is a good chart to keep in mind next week.
The daily chart for the SLX, ETF for the suddenly resurgent steel sector, closed out this past week impressively. You can see the bullish RSI divergence playing out on the top pane of the chart.
At issue now is how the steels deal with this major $44 overhead level, which you can see has been resistance since March.
A pause would be fine early next week. But the main thing you do not want to see if immediate and aggressive rejection from these levels.
I also think the performance of the steels in the coming weeks as a follow-up to last week should be a good indication of how serious we can take a rotation thesis into the materials as a whole.
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