It’s not just bitcoin mining — real, pure metals and miners are on a tear

Quietly, while bitcoin and bitcoin mining have been grabbing headlines, actual metals and miners have been on a tear.

The S&P metals and mining exchange-traded fund, the XME, has jumped nearly 13 percent in the last month, rising in 14 of the last 16 sessions. Some market watchers see further upside ahead.

"We'd still be buyers of the ETF despite the run. The bottom line is that there's still massive pent-up demand to increase capital investment, and this will be a big beneficiary of that," said Mark Tepper, president and CEO of Strategic Wealth Partners.

"These are typically late-cycle stocks, which is obviously exactly where we're at, given the fact that this bull market's been going strong since March of 2009. Right now, specifically, this happens to be a direct play on the expectation of increased infrastructure spending and capex as a result of the tax reform," he added.

Steel stocks comprise nearly half the entire ETF; its top holdings include CONSOL Energy, Century Aluminum, Alcoa and Freeport-McMoRan. The second-largest sub-industry allocation in the XME is coal and consumable fuels.

Meanwhile, the technical set-up is strong, said Craig Johnson, chief market technician at Piper Jaffray. He would be a buyer of the XME, and is recommending an overweight position in the basic materials sector.

"You can see a big low was made in early 2016. Over the last 24 months, you've been putting in a series of higher lows, making that kind of big consolidation. I think from here, [with] a break above $35, you're going to set yourself up for a move up to $44," which would imply nearly 25 percent upside from current levels, Johnson said Thursday on "Trading Nation."

The XME traded 1 percent higher on Thursday.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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