Bifurcating Mega Caps:

Inside the industrial space, there are plenty of interesting divergences among the large-cap names. FDX continues to act better than UPS, although it is starting to look heavy and I would not be surprised to see it fill in the gap from the 3/16 session. Below are a couple of names that used to be spoken of in the same sentence when mentioning industrial mega-cap names in HON and MMM. The chart here shows how HON is acting better than MMM, now 11% off its most recent 52-week highs (MMM is 36% off its annual peak). My interest in HON would be if it can break above a triple top at the very round 200 number, and notice how in May it essentially traded sideways while MMM drifted lower. Over the last one-month period HON is UNCH while MMM has dropped 5% (over the last one-year period the difference is even starker with HON up 1%, and MMM down 33%). Looking around the overall industrial group can you imagine if rails, defense, and truckers got going? Or is that a bad sign that they are floundering? The ITA has a bearish head and shoulders pattern with a pivot of 110, ODFL had better hold 300, but CSX has a bullish inverse head and shoulders above 33. The better plays will be discussed later in this note.

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