Materials ETF Has Been Rangebound
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)
Exchange Traded Funds ("ETFs") are subject to management fees and other expenses. Before making investment decisions, investors should carefully read information found in the prospectus or summary prospectus, if available, including investment objectives, risks, charges, and expenses. Click here to find the prospectus.
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Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options or futures); therefore, you should not invest or risk money that you cannot afford to lose. Online trading is not suitable for all investors. View the document titled Characteristics and Risks of Standardized Options at https://www.TradeStation.com/DisclosureOptions. Before trading any asset class, customers must read the relevant risk disclosure statements on https://www.TradeStation.com/Important-Information/. System access and trade placement and execution may be delayed or fail due to market volatility and volume, quote delays, system and software errors, Internet traffic, outages and other factors.
Securities and futures trading is offered to self-directed customers by TradeStation Securities, Inc., a broker-dealer registered with the Securities and Exchange Commission and a futures commission merchant licensed with the Commodity Futures Trading Commission). TradeStation Securities is a member of the Financial Industry Regulatory Authority, the National Futures Association, and a number of exchanges.
TradeStation Securities, Inc. and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., both operating, and providing products and services, under the TradeStation brand and trademark. When applying for, or purchasing, accounts, subscriptions, products and services, it is important that you know which company you will be dealing with. Visit https://www.TradeStation.com/DisclosureTSCompanies for further important information explaining what this means.
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)
Exchange Traded Funds ("ETFs") are subject to management fees and other expenses. Before making investment decisions, investors should carefully read information found in the prospectus or summary prospectus, if available, including investment objectives, risks, charges, and expenses. Click here to find the prospectus.
TradeStation has, for decades, advanced the trading industry, providing access to stocks, options and futures. See our Overview for more.
Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options or futures); therefore, you should not invest or risk money that you cannot afford to lose. Online trading is not suitable for all investors. View the document titled Characteristics and Risks of Standardized Options at https://www.TradeStation.com/DisclosureOptions. Before trading any asset class, customers must read the relevant risk disclosure statements on https://www.TradeStation.com/Important-Information/. System access and trade placement and execution may be delayed or fail due to market volatility and volume, quote delays, system and software errors, Internet traffic, outages and other factors.
Securities and futures trading is offered to self-directed customers by TradeStation Securities, Inc., a broker-dealer registered with the Securities and Exchange Commission and a futures commission merchant licensed with the Commodity Futures Trading Commission). TradeStation Securities is a member of the Financial Industry Regulatory Authority, the National Futures Association, and a number of exchanges.
TradeStation Securities, Inc. and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., both operating, and providing products and services, under the TradeStation brand and trademark. When applying for, or purchasing, accounts, subscriptions, products and services, it is important that you know which company you will be dealing with. Visit https://www.TradeStation.com/DisclosureTSCompanies for further important information explaining what this means.
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