Could Basic Materials Bounce Soon?

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October 24, 2018 6:56am NYSE:XLB

From Dana Lyons: Beleaguered basic materials stocks are approaching a noteworthy long-term chart level.


There have been plenty of victims in the recent (ongoing) global equity correction. One group that has been hit particularly hard is the basic material sector. Not only is the group down about 16% from its January high (as judged by the Dow Jones U.S. Basic Materials Index), but it is also now well below its January-April lows. That said, there may be hope for the group.

We say that because the Basic Materials Index is approaching a potential longer-term level of support – the breakout level above its former all-time highs from 2008-2017.

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We highlighted this breakout last year as it also arguably represented a breakout above a bullish long-term cup-&-handle pattern. So will this “support” level hold? At a Premium Postat The Lyons Share, we lay out exactly what to look for in making that determination – as well as how to play it.

If you’re interested in the “all-access” version of our charts and research, please check out our new site, The Lyons Share. You can follow our investment process and posture every day — including insights into what we’re looking to buy and sell and when. Thanks for reading!

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Disclaimer: JLFMI’s actual investment decisions are based on our proprietary models. The conclusions based on the study in this letter may or may not be consistent with JLFMI’s actual investment posture at any given time. Additionally, the commentary provided here is for informational purposes only and should not be taken as a recommendation to invest in any specific securities or according to any specific methodologies. Proper due diligence should be performed before investing in any investment vehicle. There is a risk of loss involved in all investments.


The Materials Select Sector SPDR (XLB) was unchanged in premarket trading Wednesday. Year-to-date, XLB has declined -13.50%, versus a 2.94% rise in the benchmark S&P 500 index during the same period.

XLB currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #3 of 33 ETFs in the Industrials Equities ETFs category.


This article is brought to you courtesy of Dana Lyons, JLFMI and My401kPro.


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