Material Strength:  

Are the materials ready for a comeback? Looking at the components to get a feel for what is contributing to the strength I was surprised to see that the top holding was LIN at nearly 22%, a bit top-heavy. The stock’s back-to-back 3% WEEKLY gains are certainly helping. SHW is the 2nd largest name in the fund and it is acting well too as its WEEKLY chart is sporting a bull flag that formed at the bottom of a cup with handle pattern (a break above 315 carries a measured move to the very round 400 number). Rounding out the top three is ECL which is digesting the big earnings gap up on Tuesday (its fifth straight positive earnings reaction). Below is the daily chart of the XLB and last week completed a 4-week winning streak, its first since October-November 2022, rising 2.4%. On its WEEKLY chart, one can see it has underperformed the S&P 500 since the start of 2023, but that could all change with a break above the long cup with handle pivot of 86.40. And this is all with very little help from gold, which if that could turn around could be a tailwind. Truth be told there is little gold influence with NEM the ninth largest name in the XLB at less than 4%, and FCX has some exposure to the precious metal.

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