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Outside Day in Materials ETF and DuPont

Long
AMEX:XLB   SELECT SECTOR SPDR TRUST SBI MATERIALS NAV
Technology 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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