(Premium) Mixed Bag of Materials

There’s a little something for everyone in the Materials sector.

Are you a bull? I’ve got just the charts for you.

Check out Linde, the juggernaut of the Materials sector. It makes up 20% of the XLB, and it’s kept setting new all-time highs since breaking out above its January 2022 peak. That level is also the 261.8% Fibonacci retracement from the 2020 selloff. We’ve had a long-term target up near 470, which is the 423.6% retracement from that decline. We see no reason to change that as long as LIN is above 350.

We got the bullish resolution we wanted to see in Martin Marietta. It broke out above 380, which is the 161.8% retracement from the COVID decline. Now we think it will blow past those former all-time highs at 440 and get all the way to our longer-term target above 500, which is the next key retracement level.

And there’s still a great setup for PPG, which is consolidating above 138 after challenging that level five times over the last year. The more times a level is tested, the more likely it is to break, so we’d been watching closely for the move. With PPG now above former resistance, we want to own it with a target above 170, near the former highs.

More bearishly inclined? Here’s some fodder.

Linde’s huge weight is masking a lot of weakness beneath the surface. It would come as no surprise if I told you the equally weighted Materials sector was underperforming the S&P 500. Nearly everything but large cap tech is lagging the index. But EW Materials is also setting multi-year lows relative to the EW S&P 500.

There are plenty of breakdowns to blame. CF Industries has been in a clear downtrend since it broke down in early March.

Corteva just broke to new lows.

Mosaic is in a free fall after failing to hold the 2021 highs, which had been a key support level all year.

And Westrock can’t seem to catch a break.

This sector – and really the entire market – is a ‘choose your own adventure’. There’s plenty of strength to be found in the biggest stocks. But beneath the surface, buyer beware.

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