Potential Breakout in Materials

2월 26일

Material stocks have been stuck in a tight range since the bear market began almost two years ago. But they could be showing signs of a potential breakout.

The first pattern on today’s chart of the XLB Materials Select Sector SPDR ETF is Friday’s last print of $86.83. It was the highest weekly close since May 2022. That may suggest that investors are getting comfortable with loftier prices.

Second, consider the price action so far in 2024. XLB retraced half its move between late October and late December. It then consolidated above its 200-day simple moving average (SMA). A single test of that SMA on February 5 was followed by a quick rebound.

Third, the 50-day SMA had a “golden cross” above the 200-day SMA in late December. That may suggest its longer-term trend is getting more bullish.

Finally, recent weeks have seen greater economic confidence. S&P Global Ratings hiked its estimate for GDP growth and the Conference Board dropped its recession call. That could be potentially positive for materials, which are typically viewed as cyclicals.

Standardized Performances for ETF mentioned above:
Materials Select Sector SPDR ETF (XLB):
1-year: -2.88%
5-years: +54.10%
10-years: +86.67%
(As of January 31, 2024)

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