Markets recorded a lackluster day after big gains Thursday with the S&P 500 rising .2% and the Nasdaq .1%. For the week the S&P 500 gained .8% while the Nasdaq rose .3%. Comparing YTD gains the Nasdaq still sits on a comfortable lead up 7% and the S&P 500 has risen 2.4%. We want to look at a group that if a risk on approach gains steam, could be a profitable one for investors. The materials sector as judged by the XLB is coiling and most likely will result in a strong move. The ETF is higher by just 4% YTD and 2% over the last one year period and sports a dividend yield of 1.9%. It is being bogged down by top component DD which makes up over 10% of the fund and it sits 13% off recent 52 week highs. Perhaps shareholders can be patient with it as it pays a dividend yield close to 3%. The XLB is a streaky name and this weeks gain of nearly 1% put a 4 week losing streak to bed. The fund does have a tendency to go on long rides in both directions. It produced a 6 week winning streak between the weeks ending 10/17-11/21/14 which rose 9% in vibrant trade. To balance that it went on losing streaks of 4 between the weeks ending 5/15-6/5 which fell only 3% and a 5 week slide between the weeks ending 2/27-3/27 which slumped 7%. The chemicals which make up a good chunk of the XLB could be some wind at the funds back. Doing my normal reading I see the rails are seeing a pick up in stacking their cars with chemicals to make up for the slumping oil shipments.
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