Materials ETF Has Been Rangebound

8월 26일

The SPDR Select Sector Materials ETF has been moving sideways for months, but some traders may see potential for a breakout.

The first pattern on today’s weekly chart is the price zone around $88. XLB bounced there several times, leaving a rounded basing pattern (a low, a lower low and a higher low). Also notice how the bottom of its range was slightly above the highs of 2023. Has new support been established above old resistance?

Second, the lower end of the range is near a 50 percent retracement of its move from mid-January to early April. That may confirm a new upward trend is starting. (Remembering how it rallied after holding a 50 percent retracement in early February.)

Next, the current range is near the previous record high from January 2022. Spending so long near that high may suggest that long-term resistance is giving way.

Fourth, last week’s close decisively broke a falling trendline along the peaks of April and May.

Finally, the Federal Reserve just delivered a double-dose of dovish news: minutes from the last meeting and Chair Jerome Powell’s speech. Classic cyclicals like financials and industrials jumped to new record highs and the U.S. dollar fell. Materials could also potentially benefit from that kind of macro backdrop.

Standardized Performances for the ETF mentioned above:
SPDR Select Sector Materials ETF (XLB)
1-year: +7.49%
5-years: +57.94%
10-year: +89.39%
(As of July 31, 2024)

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