16% Upside Potential in a Surprising Sector

Editor's note: This morning at 9 a.m. Eastern time, Stansberry Research is breaking a huge story that we want ALL our readers to hear. It's about a brewing conflict that's going to shape economics and politics for years to come... and the small American company that could see its shares soar as a result.

 The last time we spotted an opportunity like this, you could have turned every $5,000 investment into $50,000 or more. Tune in for the broadcast right here.

Some businesses will never become household names... yet they are huge parts of making the goods we love.

For example, several companies make materials for the iPhone. But we only give credit to Apple (AAPL) when we think of the revolutionary device.

Importantly, these companies are happy to operate out of the spotlight. That's because they can earn big profits just by making materials. And in the right environment, they can soar. What we're seeing today highlights that...

The materials sector recently rallied nine days in a row. And a 16% gain is possible in this sector after this setup.

Let me explain...

We've written it dozens of times in DailyWealth... But when it comes to investing, the trend is your friend.

Investments that are going up tend to keep going up. That might seem too simple. But if you spend any time studying history, you'll see how true it is.

One way to spot strong trends is to look for strings of consecutive up-days. These breakout moves often signal an acceleration in the current trend.

If you can spot them in real time, they can lead to solid outperformance in the months that follow. That's exactly what's possible in the Materials Select Sector SPDR Fund (XLB) right now.

XLB holds a basket of companies that profit from making materials. That includes chemicals, packaging, mining, building materials, and more. Essentially, these companies produce everything that helps make the finished goods we buy at the store.

XLB is staging a breakout right now. The fund rallied nine days in a row last month. Take a look...

XLB is taking off again after falling from mid-May into late July. You can see the breakout in the chart above.

Since 1998, breakouts like these have been a bullish sign for investors. History shows that major outperformance is likely over the next year. Check it out...

The materials sector has been a decent performer for more than two decades... returning 6% per year. That's a decent gain, but it's not much to write home about.

But buying after a setup like today's is much more exciting...

Similar cases have led to 3% gains in three months, 7% gains in six months, and a solid 16% gain over the next year. That crushes a simple buy-and-hold strategy.

In short, this is a sector you might overlook in normal times. But after today's setup, history shows that ignoring materials would be a mistake.

It's true that materials stocks aren't household names. And they might be a surprising place to expect a 16% gain in today's market. But the trend is in place. And history says shares of XLB are a smart bet because of it.

Good investing,

Chris Igou

Further Reading

Stocks that are rising tend to keep rising. Recently, Chris spotted a similar momentum signal in a stock you should be paying attention to right now... Read more here.

You might think waiting for an asset to fall is the smartest way to invest... But the uptrend is the most important ingredient we look for. Find out why in Steve's recent two-part series on his approach to beating the market, here and here.

DailyWealth Premium

The materials sector isn't the only market that's taking off. The housing market is also in a major uptrend. And one stock could soar as a result...

Market Notes


Today's company continues to thrive as folks rely on tech...

DailyWealth readers know we often talk about how "digitized" our world has become. We rely more and more on technology every single day... from phones, to laptops, to "smart" appliances. This means the tiny chips that power these devices are crucial – and the companies that make them will profit...

Nvidia (NVDA) is a $520 billion semiconductor designer. It's best known for popularizing "graphics processing units" – the chips that power modern computer graphics and artificial intelligence. However, Nvidia's chips are also used in transportation, health care, and manufacturing. And the company is benefiting today... In the most recent quarter, it saw record revenue of $6.5 billion – up 15% from the previous quarter and 68% year over year.

As you can see, NVDA is up big, recently hitting a fresh all-time high. In May 2016, editor Dave Lashmet recommended shares to his Stansberry Venture Technology subscribers... And after making some moves along the way, readers who followed his advice are sitting on gains of 685% on the combined position. Congrats to Dave on another great call!

P.S. Don't miss Dave's latest research story... We're releasing all the details at 9 a.m. Eastern time right here.