BA is not only problematic for the entire industrial space, but being the largest priced component in the Dow, its PRICE action has big implications overall. The stock on 4/5 was rejected at the now flatlining 50 day SMA recording a bearish dark cloud cover at the round 400 number. It now rests 17% off most recent 52 week highs, and is presently finding some comfort at its 200 day SMA. That level is critical to hold, and the fact that it is now retesting a gap fill for the THIRD time in the last month is concerning. But price action must be your guide, and give it a very narrow benefit of the doubt until the secular line is undercut and CLOSES underneath.
Airlines and trucking names sprung to life recently, and of course the rails have been moving right along, pun intended. This is providing some nascent strength to the IYT against the industrials. It is still lagging just a bit as it sits 7% off most recent 52 week highs, compared to the XLI which is just 5% off its own most recent peak. But the last couple weeks the IYT has advanced a combined 6.7%, besting the XLI which rose 5.5% during the same time period. This week the divergence is a bit better for the IYT as going into Friday it is UP .6% for the week while the XLI is DOWN 1.1%. Something to keep an eye on going forward.
As our readers know we are big fans of the round number theory as stocks tend to pause and find support at those figures. If the chart is longer term, and a WEEKLY chart, even better. Below is a good example of GGG and how it appeared in our Industrial Report on 4/3. The machinery play was hampered by the very round 50 number (very round numbers are 10, 20, 50 and 100) dating back to January of ’18. It blew through that level last week jumped 4.7% ignoring a bearish WEEKLY gravestone doji candle. Another aspect of the chart to like was the very taut CLOSES, which often leads to explosive moves, as the 5 weeks ending between 2/22-3/22 all CLOSED within just .35 of each other before the recent surge.