XLB re-tests fib extension.

Since the March lows, (XLB) has put in a strong performance, closing up 19.67% in April, 9.23% in May, 1.39% June, 7.21% in July, and so far 3.71% during this month. Whilst holding above its important medium and long term moving averages, XLB finds itself within sniffing distance of a yearly Double Top pattern and 1.618% Fib extension level (C), taken from the 2008 highs (A) and the crash lows of 2009 (B). Indicators, such as the Relative Strength Indicator (RSI) is perhaps showing weak diversion from XLB’s price action as it approaches the critical resistance levels mentioned, at (C)

Any signs of weakness around these levels will most likely provide a good selling opportunity, for the short-medium term, with stops above the 1.618 fib level. Above resistance could see the Materials Sector re-test the top of the multi-year rising channel (1).