Industrials May Be Attempting a Breakout
Industrials have gone nowhere for months, but some chart patterns suggest that may change soon.
The SPDR Industrial ETF (XLI) touched a six-month low under $98 in early October before rallying back toward $106. The bounce also occurred at the 200-day simple moving average, a potential sign its longer-term uptrend remains in effect.
Next, XLI had a very quick pullback on October 26 and 27. But it was immediately bought and has continued making higher lows since. The result is a tight consolidation pattern near the top of its range.
Third, yesterday’s $105.13 close was the highest since early September. Not far above that is the all-time high of $106.81. This may create the chance for a sneaking breakout, with additional money potentially coming to the table if prices venture into new territory.
Interestingly, XLI has gone 123 days without a new 52-week high. Along with the
XLB
, that’s the longest period of any SPDR Sector fund in the market.
Finally, the macro backdrop may favor industrials because of their exposure to the cyclical economy. That lifted them between November 2020 and last May. Now the pendulum may swing back in that direction with a tapering Fed and increased activity into the holidays. (Don’t forget that Transports are Industrials.)
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The SPDR Industrial ETF (XLI) touched a six-month low under $98 in early October before rallying back toward $106. The bounce also occurred at the 200-day simple moving average, a potential sign its longer-term uptrend remains in effect.
Next, XLI had a very quick pullback on October 26 and 27. But it was immediately bought and has continued making higher lows since. The result is a tight consolidation pattern near the top of its range.
Third, yesterday’s $105.13 close was the highest since early September. Not far above that is the all-time high of $106.81. This may create the chance for a sneaking breakout, with additional money potentially coming to the table if prices venture into new territory.
Interestingly, XLI has gone 123 days without a new 52-week high. Along with the
XLB
, that’s the longest period of any SPDR Sector fund in the market. Finally, the macro backdrop may favor industrials because of their exposure to the cyclical economy. That lifted them between November 2020 and last May. Now the pendulum may swing back in that direction with a tapering Fed and increased activity into the holidays. (Don’t forget that Transports are Industrials.)
TradeStation is a pioneer in the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
