XLB trade ideas
Outside Day in Materials ETF and DuPontTechnology has undeniably led the market during the pandemic. While it’s usually wise to stick with the leaders, traders should also watch for signs of new sectors coming to life. We might have gotten one today in Materials, especially chemical companies like DuPont .
The SPDR Materials ETF traded as low as $62.74 shortly after the opening bell today, undercutting Monday’s low by $0.25. Buyers immediately stepped in to drive it back into the black. They kept going until XLB was at $0.82 above Monday’s high -- a bullish outside day.
The rally also pushed XLB above its previous all-time high from late January.
Few materials are actively traded, but there are some, like DD. It also had a bullish outside candle. A month ago, its 50-day simple moving average (SMA) rose above its 200-day SMA. That’s a potentially bullish “Golden Cross” pattern.
Materials are cyclical companies that could benefit from the global economy reopening from coronavirus. Many also have pricing power, which is interesting with prices surging for materials like lumber and iron ore. The sector may also appeal to some investors after Federal Reserve Chairman Jerome Powell embraced inflation in his Jackson Hole address last week.
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XLB re-tests fib extension.Since the March lows, (XLB) has put in a strong performance, closing up 19.67% in April, 9.23% in May, 1.39% June, 7.21% in July, and so far 3.71% during this month. Whilst holding above its important medium and long term moving averages, XLB finds itself within sniffing distance of a yearly Double Top pattern and 1.618% Fib extension level (C), taken from the 2008 highs (A) and the crash lows of 2009 (B). Indicators, such as the Relative Strength Indicator (RSI) is perhaps showing weak diversion from XLB’s price action as it approaches the critical resistance levels mentioned, at (C)
Any signs of weakness around these levels will most likely provide a good selling opportunity, for the short-medium term, with stops above the 1.618 fib level. Above resistance could see the Materials Sector re-test the top of the multi-year rising channel (1).
XLB - Updated EW count XLB has completed (X) wave up in double zigzag correction. In 4 hr timeframe It dropped in (W) & (X) wave, now wave (Y) has started moving down in WXY further double zigzag correction. wave W has ABC correction, in which wave A has already over and wave B started moving up and take up to 2-4 trading days to complete then go down for C wave down. As commented in previous idea that XLB, XLP, XLE, DJT, XLF, KRE, KBE are good sectors to sell for.
QQQ is overbought; 1st Support at 195, 5.6% from the 206 peakQQQ rallied 33% year-to-date, from 154.26 (12/31/2018) to 204.98 (close on 12/11/2019), driven the Fed rate cuts (three times). The ETF is currently overbought technically as shown in MACD sloping downward. As investors rotate into the cyclical underperformers (energy, materials, industrial, and consumer discretionary), QQQ could potential consolidate and pull back. The first level of support is at 195, prior highs/lows near 50 day MA (196) and 197 (32.8% retracement of 182-206 upswing).
Happy Trading!
Sector Rotation Spreads for the S&P 1 of 2Sector Rotation Spreads for the S&P 1 of 2. Using this in conjunction with the info from stock charts can help us see overall trends. Also with this data plotted we can then apply TA and Indicators to them as well to get some better insights in who potentially can outperform the index.
EPISODE 6/11: US MATERIALS- WAVE 5 RANGE+CYCLE ANALYSIS (XLB TA)Episode 6/11: US (SPX) Sectors Technical Analysis Series - 17th of July 2019
Brief Explanation of the chart :
Wave Extension 1.618 target reached 64.34 (based on length of drop from 2009). Sin lines represent the stages of the cycle(it can't always overlap perfectly). Current bullish channel recovery since the drop that happened at the end of 2018 seems weak . This is in comparison to other sectors.
Based on the assumption that Trump wins 2020 and/or US/China Trade deal goes through => I have labelled the ranges of potential wave 5 extension. There are 2 primary targets : 70$ and 75$. Otherwise, there aren't many indications that the current top at 64.4 would be broken.
This is just a brief "free" and very detailed analysis. Perhaps in the future I might form a premium group, to whose members I will provide all the details of my research.
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Check my Previous episodes on the US Sectors :
EPISODE 5: US INDUSTRIALS (XLI) :
EPISODE 4 : Health Care( XLV ) :
Full Disclosure: This is just an opinion, you decide what to do with your own money. For any further references- contact me.
XLB(W) Elliott Wave Diag Break Retest RSI(D)XLB(W) Elliott Wave Diag Break Retest RSI(D)
Cypher Target
XLB - US materials - bullishAnother US sector chart with the possibility of a 5th wave just starting.
XLB - the weakest of them allTentative 5 wave down impulse in XLB, no evidence that it is over whatsoever, deeply oversold though.
$XLB bullish credit spread!New bullish credit spread on XLB (materials). After two weeks of bearish movement on XLB, we saw a close above $57.92 support and a bullish open this morning. Looking for bullish to neutral movement this week.
Entry 58.54
Max profit 59.00
Break even 58.72
0.78:1 risk/reward
Adjusted the XLB bullish credit spread to add a bullish credit spread one strike higher.
Max profit 59.5
Break even 59.12
0.31:1 risk/reward
XLB-Materials Momentum cross todayNo One talking about Materials sector today yet it's the one that changed momentum character today. Leading indicator for Industrials. It might still take some time to start falling but the cross today will change how institutional investors chase momentum in this sector. This isn't necessarily a good short but it is something to be aware.
'Set It And Forget It' Trade In XLBXLB (Materials ETF) has been consolidating for weeks and looks like it's getting ready to make a move higher. With Squeezes on both the Weekly and Daily Chart this looks like a 'set it and forget it' type trade:
In a perfect world, I'll be looking for a pullback tomorrow where I can pick up the 58/57 Put Credit Spread:
Put Credit Spread
Sell 58 Jan Monthly Put
Buy 57 Jan Monthly Put
At the current price, you can nearly get a 1x1 spread is what I like doing. In this case (once again at the current closing price) risking $51 to make $49/contract. This is a trade I want to be able to put on and not have to worry about too much. Ideally, the trade will be near max profit far before the contracts expire. If you'd prefer to play an underlying, you can also trade DWDP which makes up 22% of the ETF. It too has a Weekly Squeeze setting up and its chart looks nearly identical to XLB:
Playing the ETF is just an easy way to play to movement of the entire sector which as a whole looks bullish. With the ETF you're less susceptible to things like news based moves that can affect an individual stock without affecting the entire sector.
ETF XLBA bullish signal on XLB (Etf Materials Select Sector) with the target in the area $63.50. Stop loss at $57.30.
Deconstructing Materials Stocks (an over-reaction to March data)The deconstruction continues in material stocks. The culprit this time around was a poor reading and interpretation of construction spending. I think it was a big over-reaction given the overall trends.
Deconstructing Materials Stocks. drduru.com $USCR $AYI $XLB
How much will overbought Materials Sector Fall? XLBThe Materials Sector SPDR Fund has been in a bull trend since the end of the financial crisis. The trend has narrowed but remains upright since December 2016. The fund has been in a more specific trend channel since February and has created firm support and resistance levels. The fund is currently at that resistance level. Below I have laid out the reasons and levels to which the fund may dip will it continue its overall bull trend.
When we take a look at technical indicators, the relative strength index (RSI) is at 64.9868. RSI tends to determine trends, overbought and oversold levels as well as likelihood of price swings. I personally use anything above 75 as overbought and anything under 25 as oversold. Currently the RSI is below overbought levels, however, the RSI has developed a resistance point of its own. The RSI has been reaching lower highs since December 2016 and is once again at this key resistance point. If the RSI begins to retreat, the fund should follow suit.
The true strength index (TSI) is currently 4.4168. The TSI determines overbought/oversold levels and/or current trend. I solely use this as an indicator of trend as overbought and oversold levels vary. The TSI is double smoothed in its calculation and is a great indicator of upward and downward movement. Like the RSI, the TSI has created relative resistance since December. This indicator is about to hit that threshold. Failure to substantially break above this resistance, the fund should drop in the near-term.
The positive vortex indicator (VI) is at 1.1174 and the negative is at 0.7410. When the positive level is higher than 1 and higher than the negative indicator, the overall price action is moving upward. When the negative level is higher than 1 and higher than the positive indicator, the overall price action is moving downward. These indicators have been in a relatively tight trend since mid-February. When the positive VI was last at its current level, the fund tapered down which ultimately led to a drop to the fund's support line (dotted pinkish-purple on the chart).
The stochastic oscillator K value is 92.2124 and D value is 87.3198. This is a cyclical oscillator that is highly accurate and can be used to identify overbought/oversold levels as well as pending reversals and short-term activity. I personally use anything above 80 as overbought and below 20 as oversold. When the K value is higher than the D value, the stock is trending up. When the D value is higher that the K value the stock is trending down. The stochastic currently overbought, but the D value has not overtaken the K value, meaning the fund could produce gains for a few more days before ultimately turning downward.
The last three times the fund hit its resistance, it did manage to drop down to its support level in less than 12 days. The first drop was in January over 9 trading days and it resulted in a 3.62% decline. March saw a 3.41% decline over then following 6 trading days while April had a 2.91% drop over 11 days. These timeframes and declines could be blueprints for the current bounce off of the resistance level.
Considering the RSI, TSI, VI and stochastic levels, the overall direction favors a move to the downside. Based on historical movement compared to current levels and the current position, the fund could drop at least 2% over the next 23 trading days if not sooner.
