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10 Materials Stocks Charts to Watch

Follow these trendlines to determine where stocks might break next

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When will it finally be time to buy materials stocks? That’s the question on many investors’ minds given the poor price performance and low valuations for many names in this downtrodden sector.

Unfortunately, picking a bottom has been next to impossible so far, since most of the rallies have only lasted two or three sessions before running out of steam. Last week was only the most recent example, as the midweek rally was tripped up Friday after China’s disappointing GDP report.

The good news is that the downtrend has provided some clear reference points on a few key stocks in the sector. The stocks below all have defined trendlines that will help investors identify when their downtrends might be about to reverse — and in some cases, where it might be time to cut losses and move on. A quick glance through the list will reveal that in many cases, the breakdown point is much closer than the breakout level, which indicates that additional weakness in the days and weeks ahead would signal a need for caution regarding the entire sector.

For an investor inclined to go long, waiting for a break of the upward trendline means missing a good deal of upside — an average of about 14%. Still, the downturns in certain materials stocks have been so persistent that it probably will pay to give up some potential return to avoid the risk of further weakness.

Below are a few of the strongest trendlines in the materials sector, together with breakout and breakdown points:

Diversified Mining

BHP Billiton (NYSE:BHP)
Friday’s close:
Breakout: $76.38, +8.4%
Breakdown: $69.13, -1.9%

Click to Enlarge

Teck Resources (NYSE:TCK)
Friday’s close:
Breakout: $39.55, +7.9%
Breakdown: $30.65, -16.4%

Click to Enlarge


ArcelorMittal (NYSE:MT)
Friday’s close: $17.28
Breakout: $19.38, +12.2%
Breakdown: $14.95, -13.5%

Click to Enlarge

Friday’s close:
$100.00, +19.9%
$75.50, -9.4%

Click to Enlarge

Article printed from InvestorPlace Media,

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