Commentary

XLB – Another 3 Day Oreo

Weekly

XLB is about to produce a 13 week cross of the 52 week. A rofitable buy signal was produced the week of March 29, after which it decisively cross the 52 week moving average, cleared intermediate resistance, and went into more long term resistance formed from October 2017 through October 2018.

Daily

The daily chart made a nice bull flag or pennant with the 3 declining white bars on April 9, 10, and 11. The performance off the buy signal on April 12 was disappointing on April 15 as that day took back the body of April 12. It formed an oreo on April 15 as it regained the lost ground but the bottoming tail on that candle suggests drama, as many swing traders were probably forced out of their positions when prices went back into the pennant area.

The bull pennant may be suggesting a $4 move from the swing low of 57.20. On the other hand the congestion between 54 and 56 during March and early April may suggest the current move above 56 is nearing a pause.

I think XLB will eventually be able to move above the major resistance at 61 after appropriate work. Buying at these extended levels seems risky to me despite the general bullishness overall.

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