Basic materials stocks got a bad rap this fall as the global economy stumbled. It didn’t help that the sector news was dominated by plunging gold prices. 

But a look at charts in the sector shows things are not as bad as the headlines might suggest. Plus, China’s stock market has been soaring. China consumes a massive amount of basic materials, such as steel and coal, and most related industries can hop on those coattails for a ride higher.

Consider container and packaging companies to be one such group. And a stock trading near its 52-week lows but just emerging from a base looks attractive right now. 

Greif (NYSE: GEF) makes containers and packaging materials sold globally. 

On the chart, we can see GEF had a rough summer, as analysts slashed their earnings outlooks. Shares fell 25% from their July high to October low. The stock now sits 18% off those highs, while its peers are setting new 52-week highs. 

So, why am I bullish on GEF?

In October, at about the same time the broad market began its strong rebound, shares finally offered the first sign the bear run was over. It was not much, but an intraday reversal to the upside led into a sharp, albeit short-lived rally.

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By late November, GEF formed a trading range or base. It then moved above its 50-day moving average for the first time since July. That was the chart signaling something had changed.

A trendline from July was also broken to the upside and successfully tested with a small pullback. In short, GEF has finally sprung back to life.

To be sure, this is no long-term bull market, at least not with the evidence we have now. The 200-day moving average sits well above current trading, so any rally now would have to be considered a countertrend move.

Also, there is a trendline above the 200-day moving average that forms the upper border of a two-year triangle pattern. Its implications are the same: Any rally cannot be considered more than a move within the pattern.

But for swing traders, who cares? 

The stock is emerging from a short-term base and moving above a short-term average and trendline with good momentum. If and when it gets to the long-term average and trendline, then we can assess whether resistance will hold.

An emerging stock in a strong industry group is usually a good bet for swing traders to take.

Recommended Trade Setup:

— Buy GEF at the market price  
— Set stop-loss at $43.25
— Set initial price target at $51 for a potential 12% gain in eight weeks

Note: Over the past year, one little-known indicator spotted 29 stocks right before they jumped double digits in a month. Now, it’s tagged another stock as an immediate “buy.” In fact, it’s flashing the same kind of buy signal as a stock that rose 266% in a year. Get its name here, including all the details on this indicator.

This article originally appeared on ProfitableTrading.com: Beaten-Down Stock Offers Shot At Double-Digit Profits In 8 Weeks​