Running On Fumes?
In the diverse world of the industrial arena, there have been some overall interesting developments going on. GE is making a strong push higher by 6% this week, fantastic follow through after the prior week rose more than 15% on nearly double average weekly volume. RYAAY in the last 2 months has transformed itself from worst of breed to best of breed within the airlines. The seemingly perennial leader WM is looking at its potential first 3 week losing streak of 2019, and now trades in correction mode down 10% from recent 52 week highs, and Tuesday CLOSED beneath its 200 day SMA for the first time this year. Looking at an overall feel for the group the industrials have made a nice push over the last one month up almost 8%, only behind the financials. On a YTD basis it now trades as the second best actor among the major S&P groups, behind technology. Dating back to 2007 it never finished better than 3rd, so one has to admire its performance this year. A large contributor to the positive move has been the transports. The chart of the IYT may need a prudent pause however, before a resumption of the uptrend.
German Industrial Clout?
We have mentioned once this week already that PRICE has memory. Sometimes its good, and sometimes it’s the opposite. Below is the chart of Siemens which sports a nice dividend yield of 3.6%, and is the third largest component in the EWG (which is on a current 4 week winning streak up a combined 8.5%). The round 60 number is a familiar area where a tug of war has ensued between bulls and bears. This year it has been won by the latter, as 10 of 12 weeks traded above 60 intraweek between the weeks ending 4/19-7/5, however there was just one weekly CLOSE above. It is now back in that area, after an impressive 9 of 11 week winning streak, and is higher by yet another 2% this week heading into Thursday. Has it ran too far recently, or is this just the beginning with a thrust through a prior area of nagging resistance? Only PRICE knows, so pay close attention to it.
Long time readers of our know we have a liking of round number theory. When that is put to work, with a breakout that is successfully retested, that enhances the probability of a profitable trade. Below could be a good example of that with the chart of ACM, and how it appeared in our last Industrial Note on 10/17. The name is among the heavy construction group, which has seen solid action with peers like JEC MTZ and KBR to name a few. Notice the break above a WEEKLY cup with handle pattern, in a base nearly 2 years long, the week ending 10/18. The round 40 number has seen some touches, and is now looking for its fourth consecutive WEEKLY CLOSE above the figure. Tuesday did record a bearish gravestone doji candle, so it may be tested once again. Give the chart the benefit of the doubt however, as it remains resolute in defending the 40 level.