The Materials Select Sector SPDR ETF (XLB) has declined 11 out of the last 13 days after confirming resistance at its 50DMA. The new 5+ month low further confirms a bearish 200DMA breakdown.
This trading action forced me out of a position in Vulcan Materials (VMC). For too long I watched profits evaporate in this sell-off. VMC broke down twice below its 200DMA and for good measure confirmed its 200DMA as resistance.
Vulcan Materials (VMC) lost 3.0%. The stock has not closed this low since October, 2016.
For good measure, I sold a long-standing holding in infrastructure play Fluor (FLR). The stock made a fantastic recovery since an 8-year low in August of last year. I am glad I accumulated shares in the sell-off. However, the bearishness in materials made me eager to lock in profits on a company that helps move a LOT of materials.
Fluor (FLR) topped out with the market in late January and is trying to hold support around the February low. For now, 50DMA resistance is the more dominant theme.
Allegheny Technologies Incorporated (ATI) deals in specialty materials. At an 11.3 forward P/E, 0.8 price/sales ratio, and a 1.7 price/book ratio, I think of this stock as a very cheap play on a strong global economy. I was looking to buy the stock here around its 200DMA, but the further breakdown in XLB put a pause on my plans. I am now staying on the sidelines to watch some more.
