Cat Out of the Bag:

The industrials as a whole are having a pedestrian YTD move thus far, now the 6th best major S&P sector up 2.4%. The XLI is trading at all-time highs as has advanced 13 of the last 14 weeks and is up another 1% this week heading into Thursday (12 of the 13 weeks CLOSED at or very close to highs for the WEEKLY range). On this chart, you can see how this group has acted better than the Nasdaq to show how firm it has been. UPS, not the bellwether it used to be, but still worth following in the group may have put in a bottom last week after a bullish hammer and dragonfly doji candle on 2/1 and 2/2 which also filled in the gap from the 11/13 session. There is still work to do there but one could remain constructive above last week’s lows. Below is the daily chart of CAT, the largest holding in the XLI, and this has backed off somewhat after its most recent earnings reaction on Monday. I think this one could gravitate lower a bit in the near term, totally understandable given the more than one hundred handle run from late October after a WEEKLY doji candle. This has still yet to meet its measured move to 360 out of a bull flag. Look for that possible achievement in the second half of 2024.

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