Living in a Materials World
The Materials sector has been working its way up the sector relative strength rankings in recent weeks and moving up 27 points this week to the second spot. Now remember this is a 3 month relative strength ranking so it moves faster than normal. This make some since with the commodity base this sector.
We still have all the data on the Materials page on the site, but since the charts aren’t posting we will use the $IYM as the current proxy. Here you can see that flag, then shake out, and then breakout coincided with the downtrend line off the highs which is in the rear view mirror for now. If it can clear this immedate area, there is also a volume vacuum opening just above. Working to close this vacuum also would close many gaps along the way, so I would expect some pushback at a minimum.
Subsector RS and Breadth
The Power EW subsectors are ranked near the middle of the total subsector rankings with the sector only rankings showing metals on top with Chemicals are on the bottom of the subsector rankings. Basic Materials has a lot of weight from the housing and construction spaces that is showing as well.
Expand the two full breadth snapshots below to see how the breadth picture is looking versus the rest of the field.
Materials ETF RS Rankings
From an ETF view, the miners seem to be the big winners recently especially industrial and energy leaning materials. That is after chemicals (think fertilizer) led for a while within the sector before pulling in sharply. Even with the big move in $GDX and $GDXJ this week, industrial and rare earth metals are still better performers.
Material Stock Relative Strength
Food and Beverage ETF is nearing the highs while the rest of the Staples space struggles with $XLP. It did pull back from the previous breakout attempt as the Consumer Staples got hit toward the end of the drop last week, but RSI held at 40 this time. The ETF also held the previous breakout back test at the VPOC noted on the daily chart. Another move over 46 is need to get the next leg higher confirmed.
Stock RS Movers
Vanguard Industrials ETF is one of many you can choose in the space to get a broader mix than just Aerospace and Defense of $ITA. In the Weekly Sector Review we saw the Industrial Goods and Transportation subsectors are moving. A move back above the VPOC is next to help solidify the RSI bull range shift on the daily. The Weekly RSI chart saw the RSI bounce along the 40 level during the correction, but never lost the bull range.
Materials Stocks to Watch
Here are some stocks showing relative strength versus the markets in recent action
These are a few I pulled out looking through, there were more chart setups, but I tried to avoid those with earnings in the next couple of days. One can always drill down to the subsector levels if you want to focus more on a specific theme instead of the broad sector rankings, but for now I think this give enough to focus on.
As always, I hope this helps!
The charts and tickers above are for educational purposes and are not recommendations to do anything. This is just to help show you what we see and then let you take it from there and do your own due diligence. Either build your own trade plan or get with your advisor or broker form one before considering any ideas above.