It’s A Little Complicated:

The industrials over the last one month period have been a laggard compared the the other 10 major S&P sectors. The XLI during that timeframe was just the 9th best performer barely clinging on to a fractional advance. The daily chart of the XLI below does show a doji candle on 6/4, but that was preceded by a nasty bearish engulfing candle on Monday with a rejection at the 50-day SMA. We discuss what we think on the chart but as always to me, it comes down to an individual stock selection process. Looking over the top 10 holdings it still amazes me that UBER is the 6th largest name in the fund and this is how we looked at it recently as it now emerges out of a bullish falling wedge. CAT is a bit further along in the process that bears feel will play out with an undercut of the late April lows (something the XLI has not done yet) but if these lows hold a fruitful double-bottom pattern awaits. Top component GE looks technically sound with a doji candle Tuesday off its 50-day SMA but some negative divergence has been occurring since February. And then there is the ongoing fragility of the transports with that theme seen here with UNP behaving inferiorly since the start of 2024 against its industrial peers. The XLI chart along with others may need some time but other individual names are setting up. Act accordingly.

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