Industrial Comeback?
Are the once powerful industrials mispriced somewhat here? PRICE tells us all we need to know and as technicians, we believe it is omnipotent. The XLI over the last one-month period is just the 10th best of 11 major S&P sectors, besting just the consumer staples (that data was from this morning). The chart below of the ETF looks like a “logical” spot to take advantage of the recent weakness with a decent risk/reward setup. Some of the most recognizable spaces within the sector have been the ones weighing it down the most. Airlines, most likely due to rising energy costs, rails have been in the news with derailments, and delivery services are taking notice as full-time UPS drivers are now earning $170K annually (labor costs). But like we said these things are all known and likely “PRICED” in. For all that negative chatter the XLI is still just 5% from its most recent 52-week highs and is retesting a prior bull flag breakout and potentially carving out a double-bottom base. A CLOSE below 103 would be an admission of being WRONG.