No Material Weakness:

The material sector is now the best performing major S&P group over the last one month period, and third best over the last 3 months. It is making a name for itself quietly, of course helped by gold which witnessed a huge breakout via the GLD above a 127.31 cup base pivot on 6/19. That is cooling off a bit with the spinning top and doji candles on Tuesday and Wednesday. Steel names have been weak, and select paper plays as well, most notably IP which has been in a steep downtrend since February 2018. Those who do their homework however see other glimpses of light with some chemical names. As always its a stock pickers game. If you want average returns you trade the averages. Those seeking superior returns should pursue individual names, with good risk management.

Former Rivalry No More:

A previous war between two specialty chemical names, now looks like a mismatch. CF ground out a nice, gradual bottoming pattern with a rough range between 40-45 starting last December (remember topping action is loose and volatile, and bottoming action should be just the opposite). That was taken out to the upside on 6/14, and the chart now has the look of a bull flag formation. It is attempting to record its first 4 week winning streak since last September, with the last 2 consolidating the 14% jump the weeks ending between 6/7-14. Longer term the right side of a cup base is taking shape with a potential pivot of 54.18.

Examples:

One would have to been living under a rock not to be aware of the big gold move. Below is a name that has been a beneficiary of the jump in FCX, and a chart we wrote for a client recently. Notice how the round numbers played a role in the name with 20 being firm resistance in the beginning of 2018, and the ten figure a floor in a double bottom the last 6 months, that also produced bullish WEEKLY candlesticks there. It is on a current 3 week winning streak up 16% in the process, and by another 2.5% heading into Friday. It is still closer to the round 10 number, and coming up on a big test with a 200 day SMA challenge. 

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