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Is a Major Move Higher Coming for South African Miners?

Published 06/19/2024, 12:36 AM
XAU/USD
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NEM
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EZA
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South Africa is renowned for its developed and diversified mining industry.

We put the country ETF EZA on our radar as mining output has declined significantly since the 1970s due to various factors, including political issues, high costs, and labor disputes.EZA-Daily Chart

This has left production or supply very possibly unable to meet rising demand.

Here Are Some Key Aspects of Mining in South Africa:

Precious Metals:

  • Platinum and gold.
  • Palladium
  • Coal Mining
  • Chrome and Magnesium-used in stainless steel
  • Diamonds

The Daily chart shows a 5% rise today in EZA the ETF as it gapped higher to a nearly a 52-week new high.

The biggest sector weighting is in the Financial Services. Third is Basic Materials with specialty chemicals, gold, copper and building materials at the top.

Linde Plc (NYSE:LIN) is a holding. I mention this as the chart is also interesting looking.

Newmont Mines (NYSE:NEM) is the largest holding in the gold industry-another chart to keep an eye on.

Back to the chart, this move up puts the ETF in a strong bullish phase with momentum and leadership moving up as well.

Even more interesting is the weekly chart.EZA-Weekly Chart

Note the 200-week moving average in green.

If EZA closes the week above, it will be the first time since last July.

Plus, the momentum and leadership look quite favorable for a much bigger move higher.

The monthly chart has a story as well.

EZA-Monthly Chart

I am a big fan of monthly charts.

I particularly like when I see a phase change (business cycle) on a 2-year or 23-month moving average OR a 6-year or 80-month moving average.

Last month EZA cleared the 23-month.

Thus far, this month, EZA has yet to take out May’s highs, but it is close.

More importantly, we are in the start of a 2-year business cycle expansion which has reversed from its down move going back to 2022.

In May 2011, this ETF peaked at 77.58.

That gives EZA a lot of upside with a good risk to under May 2024 low.

ETF Summary

  • S&P 500 (SPY) New highs to start the week
  • Russell 2000 (IWM) 197-202 tightest range to watch
  • Dow (DIA) Marginally confirmed the phase change over 50-DMA
  • Nasdaq (QQQ) All-time highs yet again
  • Regional banks (KRE) Watching the range 45-50 CAREFULLY
  • Semiconductors (SMH) ATHs
  • Transportation (IYT) Could not hold over the 200-DMA
  • Biotechnology (IBB) 134 support 140 resistance
  • Retail (XRT) Rallied off the 50-DMA like her life depended on it-we need more
  • iShares iBoxx Hi Yd Cor Bond ETF (HYG) This is all risk on-as long as it holds above 76.50

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