Delivering The Goods:
The industrials delivered the goods Tuesday, pun intended. The group was the best performing of the major S&P sectors as the XLI was up 1.3%. The ETF has been held hostage by the round numbers for a year now, and is looking at a potential 3 week tight pattern depending on Fridays CLOSE as the prior 2 finished within just .12 of each other. We have witnessed big moves regarding earnings, and today WHR put shorts in the spin cycle finishing 20 handles off intraday lows.
UNP is best of breed in the small world of railroads. Below is the ratio chart comparing it to CSX. The company lost its CEO suddenly about a year ago, and perhaps that is why it has lagged UNP. The latter trades just 3% off most recent all time highs, while CSX is 14% off its own. On a YTD basis UNP is higher by 16% compared to CSX’s 5%, and the former is trading right at a breakout from a double bottom trigger of 159.73. Stay the course UNP, pun intended.
Looking at longer term charts often helps see a clearer picture. The overall trend becomes more understandable. Below is the chart of a favorite industrial of mine, John Deere and how it was presented in our 1/18 Industrial Report. Notice the base is over one year old, and was stopped at the round 160 number several times. It is flirting with the entry one more time here. The right side of a cup base pattern is taking shape with a potential add on above 175.36.