Have These Mining ETFs Found A Bottom?

The story is widely known at this point. A toxic cocktail of one part European debt crisis, one part sluggish U.S. economy and one part slowing emerging markets growth has plagued mining and materials stocks and ETFs in 2011. Simply put, traders love this corner of the market when things are all fine and dandy. Throw in a few negative headlines and sentiment shifts quite rapidly. How dark have the clouds been for ETFs that track miners of things other than precious metals this year? Very dark indeed. In the quartet of funds we're about to look, the BEST performer is still down about 20% year-to-date. Now the question is have these ETFs found a bottom or are they still more value trap than value? Let's have a look. iShares S&P Global Materials Index Fund MXI: We'll start with the ETF that has been the best performer of our group and that's the iShares S&P Global Materials Index Fund. We often note this ETF surprisingly flies under the radar, which is odd given its constituents. For example, BHP Billiton BHP, the world's largest mining company, accounts for over 10% of MXI's weight. MXI's chances for a better 2012 are decent and maybe the best on our list because the ETF is highly concentrated in large-cap names. This kind of the blue bloods of the mining and materials world ETF. BHP, Rio Tinto RIO and DuPont DD, just to name a few. If support is honored at $55, MXI has a good chance to be more productive next year than it has been in 2011. Global X Copper Miners ETF COPX: Maybe you don't know, but the Global X Copper Miners ETF has been on fire over the past week, surging more than 14% in that time. The deal here is simple. COPX tracks copper miners like Freeport McMoRan FCX. Not the type of stocks you want to be involved with in a rough market, but maybe this central bank liquidity gambit will spur the high-beta trade. COPX's fortunes are tied to China. The ETF is a short below $12 and would be in serious rally mode above $17. Global X Uranium ETF URA: Captain Controversial. Unless one has been living in a cave, it's safe to say one knows the Global X Uranium ETF has been one of the worst-performing non-leveraged ETFs in 2011. The negative news flow surrounding the uranium sector has cleared up recently, but URA really needs to string together consecutive closes above $10. Below $9, URA could reward extremely patient investors with a double...over the next 18-24 months. Overall, URA has probably found its bottom. Now investors need to acknowledge strong uranium sector fundamentals to drive the ETF higher. Market Vectors Rare Earth/Strategic Metals ETF REMX: The lone rare earths ETF on the market today, REMX is basically as beholden to China as COPX is, just in a different way. REMX's problem lies in the fact that the market has refused to acknowledge robust demand for rare earths and tight supply, at least in terms of impact on the stock prices of REMX constituents. Unfortunately, any news of lower prices or demand and increased production hammers REMX. The bottom is probably in at $14, but waiting for a move above $18 would be advisable. From there, a move to $22 is possible, but don't too much more greedy than that. Bull case: An extreme turn of sentiment brings all of these ETFs back into favor. In the case of URA and maybe REMX, investors find valuations appealing and industry consolidation sparks these funds higher. Bear case: A move to bonds, cash or even conservative stocks would make the pain for these ETFs even worse and perhaps make them threaten key technical levels.