Runner Up Showing Respectable:
The industrial group has put on a nice run recently, as it remains second best on a one month look back period, just behind the resurgent financials. But on a YTD basis it is also the second best actor of the major 11 S&P sectors (will it hold runner up status into year end?) with the XLI gaining more than 28%, lagging only technology which has put up a very strong 2019 up 40% thus far. On the chart below from Novel Investor, we can see the industrials have not finished a year better than third since 2007, and it has not been the top performing sector in at least 23 years. The XLI is still trading north of a very long double bottom breakout pivot of 80.51, in a pattern nearly 2 years long that started in January ’18. Today was just the eight decline for the ETF since that beginning of October, and Tuesday witnessed strength in the defense group. The XAR is carving out a nice cup base with a potential pivot of 112.39.
Ready For Takeoff?
We recently spoke about the roadblock at the very round 200 number for the IYT, as the ETF recorded dubious candles on 11/5 and 11/7 after being over the figure intraday but CLOSED more than 2 handles off highs for the session. It is top heavy with rails, truckers and delivery service giants FDX and UPS. One has to scroll down to the EIGHT largest holding to recognize an airline name in UAL. Below is a ratio chart of the airline ETF, JETS against the IYT. The JETS fund barely trades, but can be used as a good feel for how the group is doing overall. It is on a 5 week winning streak and just 5% off most recent 52 week highs, compared to the IYT just 2% off its peak. It is acting well despite crude looking like it put in a quadruple bottom at the 51 number since June. Some names in the space are sticking out for their strength like JBLU and LUV, and others like AAL which can not seem to get out of its own way.
They say in life you are who you keep company with. The better the people, the better you normally are. Same goes with the stock market. It is always optimal to have peers in the group acting well, so your one name is not doing the “heavy lifting” so to speak. That could be taken literally with the heavy construction space, as names like MTZ and PWR have been acting very healthy (MTZ has jumped 8.4% the last 2 weeks and PWR rose 15% during a recent 4 week winning streak the weeks ending between 10/11-11/1). Below is another name in the arena, with JEC, and how it appeared in our 10/18 Industrial Note. It is behaving well POST breakout, just what you want to see as we know the best breakouts tend to work right away. The stock has gained 30 of the last 46 weeks, jumping 40 handles in the process. It trades directly at highs last seen in December ’07. A break above this area and through par would be extremely constructive, pun intended.