Industrials Set to Build on Gains

After the election several sectors of the stock market took off to the upside. The one that gained the most notice was the Financial sector. That was the right place to focus the attention as the gains in some stocks were massive. But since the beginning of December not much has happened there or in the other sectors that rode the election wave higher.

One sector though looks primed to make a secondary move to the upside, the Industrials. The chart below shows the Industrial sector ETF ($XLI). Notice the long consolidation prior to the election, with a slightly declining price action. That ended with a 13% move to the upside in the 3 weeks following the election. The momentum reached overbought levels on a move that fast ans the price leveled out.

After 6 weeks of sideways price action there are indications of a potential move to the upside. First the Bollinger Bands® have squeezed. This is often a precursor to a large move. Next the RSI and MACD have both retrenched, working off overbought conditions. And both have stopped falling, holding in bullish ranges. The MACD is also ready for a positive cross. Thursday saw the ETF make an attempt to move higher that pulled back, but held over the recent range, over 63. Continuation would give a target to 70 on a Measured Move, a 10% move up from the close Thursday.

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

blog comments powered by Disqus
Dragonfly Caps Blog