NEW YORK (TheStreet) -- Madonna move over or reinvent yourself.
The Materials Select Sector SPDR ETF (XLB) requires nerves of steel to trade. The high to low swings have been a roller coaster ride in recent years. A look at the longer-term technical pattern suggests no quick returns.
There are four significant buying opportunities on this chart, which shows the XLB with a 12-month momentum study. This shows the relationship of this month's price to the price 12 months ago. If we are higher than 12 months ago, the indicator is above the zero line. If we are lower now than we were 12 months ago, the indicator is below the zero line.
We want to focus on the periods below the zero line.
In 2003, after the 2000-2002 bear market, we see a period of several months below the zero line before prices moved higher. In late 2008 and early 2009, we see a period with much lower momentum readings for a longer time. Then 2012 was another opportunity.
This year is the fourth example and perhaps opportunity to look at the XLB when prices are trading below the levels of twelve months earlier. If prices follow the pattern of the previous three examples, it should take several more months before the long side of XLB becomes ready to go on tour again.