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Lyondellbasell Industries is extending last week’s trend line break.  An upgrade from JP Morgan(‘Overweight’ from ‘Neutral’) and positive comments from Deutsche Bank are providing the spark as the week comes to an end.  

LYB has been consolidating in a narrowing range since mid June.  During this phase a declining 200D moving average has provided heavy resistance.  The last weekly close above the 200D was back on January 17th.  This key indicator is now in a supportive position as shares head for new September highs.

At the June peak LYB had surged over 130% off the March lows before entering a 10 week consolidation pattern.  During this time the stock continued to put in higher monthly lows.  The September low is the 6th straight.  

We believe LYB is set up well for more upside.  Shares could travel quite a ways before returning to overbought territory.  On the upside a key hurdle is the August high.  An ugly breakdown gap back in early June capped last month’s peak.  LYB is beginning to put some distance on this area($73.50).  A weekly close above would be encouraging.  

On the downside, a close back below $69.00 would violate this week’s low sending a clear warning sign that the declining 200D moving average is still in control. 

No position.