Defense Is Your Best Offense:

That is a sports axiom but the chart below of the ITA shows just how strong this subsector of the aerospace and defense space inside the industrial complex has been. The WEEKLY ratio chart on the bottom of the chart shows that for almost one year now the ITA has been trading sideways after a prior uptrend from late 2021 and the first quarter of 2022. Is the digestion getting a bit long in the tooth and is the stalling action having the bears salivate? RTX just like the XLI (stock happens to be the largest holding in both the XLI and ITA) is trying to maintain ground above the very round par number. UPS is showing wide and sloppy trade, hallmark bearish traits, and another top-ten holding in the XLI in UNP is looking like it’s been derailed with both of its 50 and 200-day SMAs sloping lower. Getting back to the ITA which has been the beacon of light in the improving industrials last week recorded a spinning top candle, which speaks to indecision, and the likely possibility that a change in the prevailing direction could be upon us. These cyclical groups need to hold up in this area for the nascent bullish market theme to hold up.

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