While I maintain the DecisionPoint Scoreboard for the large-cap SPX, OEX, NDX and Dow, Carl maintains a DecisionPoint "Sector" Scoreboard. On Friday's DecisionPoint show (which airs Fridays at 4:30p EST on StockCharts TV), Carl and I pointed out that the Materials sector triggered a new LT Trend Model BUY signal. Interestingly, the signal came on the heels of a significant breakout. The only two sectors left with SELL signals are XLE and XLF, which have both been reluctant to accelerate off of December lows at the same rate as many of the other sectors.
A Long-Term Trend Model BUY signal is generated when the 50-EMA crosses above the 200-EMA. XLB had been traveling in a consolidation zone since about mid-February. On Monday, price broke above overhead resistance. On Tuesday, the Price Momentum Oscillator (PMO) triggered a BUY signal with a positive cross over its signal line. The week continued strong for XLB, as the PMO moved out of a declining trend and the SCTR shot upwards. The OBV is confirming the rising trend. It looks like $60 is the next area of overhead resistance.
On the weekly chart, we can see another PMO BUY signal. Our Trend Models aren't based on weekly chart crossovers, but I do see that the 17-week EMA is about to cross above the 43-week EMA. The weekly chart confirms overhead resistance at $60, but it also suggests that the price could rise higher and test the overhead resistance at $63.
Conclusion: The Dollar is possibly weakening near the top of an ascending wedge. However, it is a loose long-term pattern that may not resolve this time around either. The last price top didn't make it up to the top of the wedge, which could suggest a decline. A weak Dollar would likely help the Materials sector and feed its current rally.
Watch the latest episode of DecisionPoint with Carl & Erin Swenlin LIVE on Fridays 4:30p EST or on the StockCharts TV YouTube channel here!
Technical Analysis is a windsock, not a crystal ball.
Happy Charting!
- Erin
Helpful DecisionPoint Links:
DecisionPoint Shared ChartList and DecisionPoint Chart Gallery
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
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