Southern Copper (SCCO) - Get Report reports earnings after the close Monday. Consider it a preview of Freeport McMoRan's  (FCX) - Get Report  report after the close Tuesday. There's been some technical consolidation underway on the SPDR S&P Metals and Mining ETF (XME) - Get Report daily chart, and now it looks like the sector is ready to break out.

SCCO, the performance leader in the space, has already broken above a four-month resistance level of its own and confirmation by the broader-based ETF could initiate another period of outperformance by the stock.

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The daily chart shows the XME making a high in February and then reversing direction, breaking below its 50-day moving average and a forming a series of lower highs and lower lows. It was able to find support at the $28 level and move back above the 50-day average, returning this month to make another retest of resistance in the $31 area.

Directly below the XME chart is a graph of the year-to-date performance of Southern Copper relative to the performance of the mining ETF. The fund is up nearly 4% in that time but the stock has outperformed the broader space by 14%, and it looks like that trend may continue.

Two weeks ago, SCCO broke above the $36.50 resistance level of a four-month rounded bottoming pattern, and has gone on to form a small bullish flag pattern. The commodity channel index, which can be used as an overbought/oversold indicator or a trend indicator, is above the 100 level and is, in this case, more likely reflecting trend strength.

Daily moving average convergence/divergence is overlaid on a weekly histogram of the oscillator and is crossing above its center line on both time frames. This reading reflects both positive trend strength and positive price momentum. Chaikin money flow has been making lower highs and lows around its centerline and is currently in positive territory.

The rounded basing pattern breakout projects a move back above $40.00, as does the flag pattern, which would take the stock to a new all-time high. SCCO is a good risk/reward trade and a speculative buy ahead of earnings, using a tight protective stop.

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The author is an independent contributor and at the time of publication had no position in the stocks mentioned.