First: Check Your Materials
- Posted by Greg Harmon
- on January 9th, 2013
I just built a model space station with my son. The first step in this process was to open the box and review all the materials. Materials are the building blocks of any project. Including the economy and the broad market. And the Material Select Sector SPDR ETF, $XLB, is looking ready to make a major statement about that. The weekly chart below gives 5 indications that it is ready to continue higher. First, since October 2011 it has continued to make a series of higher highs and higher lows, defining the trend. Next the stock broke above the symmetrical triangle last week, and has a
target on the move to 49.50. Third the Relative Strength Index (RSI) is bullish and rising supporting further upside. Next, this stock is being accumulated, and has been since this uptrend began. Finally the last remaining barrier to retracing the 2008 move lower is the 88.6% Fibonacci level. This one is not followed by many outside of harmonic traders, but proved to be a brick wall the first half of 2011. A move over 38.81 would clear the way to a full retrace and then the triangle target.
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Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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