The Best Look This Morning

Weakness in small caps and the Nasdaq off more China trade war headlines seems to be putting bulls to the test, again, this morning.

However, it is worth reiterating that dips have been remarkably shallow and have yet to present anything remotely resembling a crisis for markets, yet. Also note we have a bit of a lull this week in front of the FOMC next week on the 26th. Thus, it will be interesting to see if dip-buyers give it another shot in tech and the IWM, as both of those major parts of the market notably lag as I write this. 

In the meantime we should become more acclimated to the XLB, ETF for chemicals, ags, and select materials plays. 

On the XLB daily chart, below, we can see a massively coiled base turning higher this morning, or at least giving it the ol' college try. Ags like CF MOS NTR should be stalked closely, and chemicals like PPG are back in play. But mostly it is those fertilizers, which always seem to rally when traders least expect them to. 

Moreover, there is plenty of overlap in the XLB names with XME, which is up nicely this morning as well. Actually, XME is up more than XLB on a percentage basis but is sporting a much sloppier chart.

Either way, materials plays in general are the early standouts are should command our attention a bit more, especially if tech and small caps are going to cool off into the FOMC.