The Market Vectors Steel Index ETF (SLX) may benefit as many of the steel names look interesting on the upside, and as the Chinese equity markets are starting to heat up as well, which may be an indication that the gargantuan global stimulus packages are kicking in.

The SLX has carved out a major 7-month rounded base pattern, which is now putting upward pressure on multi-month resistance at 35.50/70, which if hurdled should trigger upside acceleration towards a confrontation with the declining 200 DMA (at 42.52 today).

For the past two weeks, the price structure has been in a high-level contracting consolidation area that could be on the verge of upside breakout and acceleration. If so, today might be the last time I can enter a long position prior to vertical lift-off.

Conversely, if the SLX fails up here at 35.50 and needs to loop to the downside within the 2-week coil, I will be looking to add to the long position around 34.00 in anticipation of the emergence of a powerful new upleg.

Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com.