The basic materials sector has quietly moved up to the third position in the DALI sector rankings for the first time in two and a half years.
The basic materials sector has quietly moved up to the third position in the DALI sector rankings for the first time in two and a half years. While there has been attention on miners, especially those in the precious metals space, the materials sector has started to broaden out in recent months. Both the State Street Materials Select Sector SPDR ETF (XLB) and the Invesco S&P Equal Weight Materials ETF (RSPM) broke out to new all-time highs in February. The cap-weighted XLB took out its old all-time high dating back to 2024 while RSPM finally eclipsed its 2022 high. RSPM has slightly outpaced XLB this year with year-to-date returns of 12.57% and 11.80%, respectively. Both materials funds have near-identical fund scores around 4.20 and are both trading in heavily overbought territory with respect to their ten-week trading bands. Nonetheless, the move to third in the DALI sector rankings, both cap-weight and equal-weight representatives moving to new all-time highs after struggling the last few years, and fund scores above 4.0 make the materials place an area worth scouring for opportunities.
Out of the 26 stocks in RSPM, there are only six with buy ratings (four or five technical attributes). The 5 for 5’ers include: Albermarle Corp (ALB), Steel Dynamics Inc. (STLD), DuPont de Nemours Inc. (DD), and CRH PLC ADR (CRH). Out of these four names, STLD has had the most consistent technical picture over the last year. Until bursting to the upside to start 2026, STLD had held close to its positive trendline, generating seven consecutive buy signals in the process. This streak was broken in January briefly before STLD notched two more buy signals on its trend chart. STLD has been a high attribute name since October, and while it is trading near the top of its trading band, it can be strongly considered on pullbacks. Overall, the materials sector is seeing strength emerge outside of the precious metals miners making broad exposure and targeted exposure viable moving forward.
