Industrial Revolution?

The markets have a very short memory as 2019 is off to a fast start, and one can not blame their putting the ugly Q4 in the rear view mirror. Below is just what bulls want to see in the YTD returns, except perhaps for energy leading a few weeks into the year. All of the major S&P sectors are in the green so far, but lagging are staples and utilities. Two things come to mind about this nascent run. One good news is being interpreted so in PRICE action. Secondly the old adage states, “bull markets do not let you in”, and that is how it feels presently. No pullbacks have been offered, with the exception of the 1/3 session.  

Take the Longer View:

Thursday the industrials were higher by 1.7%, the second best behaved major sector behind just the materials. Give the XLI temporary credit for CLOSING above its downward sloping 50 day SMA today. On its WEEKLY chart below, obviously a longer time frame, it is still premature, but bulls can point to a couple positive technical aspects. Weakness was delivered following the inability to break above a cup base trigger of 80.76 the week ending 9/21/18 (base was V shaped which tend to be more failure prone) in a base 9 months long. We are still in no mans land on the ETF, but many individual names are setting up that we identify in the latter part of this report, including DE.

Examples:

The airlines have been seeing some turbulence recently, we spoke of this in our Industrial Report from 1/10, although collectively there has been some firmness. The JETS ETF is outperforming this week as the fund is higher by 2.8% this week heading into Friday. Like every group there will be winners and losers, and below is the chart of RYAAY and how it was presented in our 1/10 report. It is a laggard, if one turned its chart upside down it would be a beauty, down nearly half of its value from the most recent 52 week highs. This week it has declined nearly 6%, very weak relative strength. The measured move has not been achieved, and one may want to pair this name up on the short side with a leader like SAVE.

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