Full-time stock trader. Follow me here and on 12631
Joined Apr 1, 2010
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Materials Making it Back Home

In addition to the financials, the materials have been in a notable, sector-wide slump since early/mid-2011. The financials have taken aback many a trader with their strength of late, but it is also worth noting the powerful breakout in the materials’ XLB sector ETF weekly chart, the first one below. This is a classic symmetrical triangle breakout.

Now, before we become too giddy it is important to acknowledge that chart patterns–especially triangles–can and often do morph into larger patterns. Thus, automatically assuming the any old chart breakout is legitimate is always a tricky proposition. For that reason, we want to delve deeper to find a better answer.

The second chart below is of the daily timeframe for the XLB. You can see the surging buy volume to accompany the recent breakout, which adds credence to the bull case as buyers of size want in on this move. Moreover, the miners have made an impressive comeback in recent weeks, not to mention the sharp-looking setups in the chemicals and fertilizers space.

Indeed, the materials may very well have made it through an eighteen month consolidation and are prepared for an autumn to remember.



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  1. BillTrader

    Thanks again, Chess. Excellent work as always. Have all of your trades on 12631, up 5% in the past 2 weeks. You nailed this move.

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