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First: Check Your Materials Before Trading

By (Gregory W. Harmon) |  Stock Markets  |  Jan 10, 2013 07:02AM GMT  |   Add a Comment
 
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I just built a model space station with my son. The first step in this process was to open the box and review all the materials. Materials are the building blocks of any project. Including the economy and the broad market. And the Material Select Sector SPDR ETF (XLB) is looking ready to make a major statement about that.

The weekly chart below gives 5 indications that it is ready to continue higher. First, since October 2011 it has continued to make a series of higher highs and higher lows, defining the trend. Next, the stock broke above the symmetrical triangle last week, and has a target on the move to 49.50.

AMEX-XLB
AMEX-XLB

Third the Relative Strength Index (RSI) is bullish and rising supporting further upside. Next, this stock is being accumulated, and has been since this uptrend began. Finally the last remaining barrier to retracing the 2008 move lower is the 88.6% Fibonacci level. This one is not followed by many outside of harmonic traders, but proved to be a brick wall the first half of 2011. A move over 38.81 would clear the way to a full retrace and then the triangle target.

Disclaimer: The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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SPDR Materials Select Sector ETF
 
 
 
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