Looking At The Dow Jones “Industrials”:
Of course a lot has changed since the Dow began many moons ago. This benchmark is not a good indication of the industrials anymore, but it is an index that the general public most likely talks about at the water coolers at work (and being a cap weighted index some of the higher priced names like BA CAT MMM and UTX have a huge influence). Therefore it does not hurt to take a peak at the index from time to time. Below we see a bull flag taking shape as it climbs the proverbial wall of worry. There is zero representation of airlines in the Dow, but a break above this bull flag could see a real takeoff, pun intended.
The actual industrials are showing strength once again. On a YTD basis they are now back to the second best performer in the major S&P sectors up more than 19%, trailing only technology. Last week they were the best actor as the XLI jumped 2.9%, and Monday they showed excellent follow through rising another 2.1% on firm volume. Let’s take a look at the WEEKLY chart below to get a better picture of the longer time frame. 2018 was a tough year for the group, with frequent heavy volume declines. Is this the year we see a nice snap back in the space? The strong start suggests so.
The rails are a tight knit bunch with just a handful of players, but they can give a good indication of what the genuine health of the economy truly is. Below is the chart of the best of breed name NSC and how it was profiled in our 3/29 Industrial Report. As the best breakouts do, they tend to work right away, this on offered an add on point above the WEEKLY double bottom breakout, with a move above a bull flag formation. Not sure why but this mode of transportation seems to be preferred over trucking, from a pure PRICE action standpoint.