Research Excerpts

Industrials Sector Key To Q4 US Broad Market Direction

Posted on: Friday, November 15th, 2013

The Industrials Sector has been a key driver in the US stock market’s most recent leg higher, outperforming the benchmark S&P 500 by 3% just since October 16th.

However, there is now some evidence that suggests that this sector may be getting tired.

The following (green highlights) is a brief excerpt and one of 16 charts that appear in our November 14th Sector Watch report.  This monthly report, one of 8 different reports that we produce for subscribers throughout the month, reviews and updates our current picks for relative outperformance or underperformance in the sectors of the S&P 500, and also discusses emerging sector-related opportunities, including constituent stocks, for the next 1-2 quarters.

Excerpt From: Sector Watch
Asset Class:
Industrials Sector
Date: November 14th, 2013

The red line in the upper panel of Chart 12 (next page) plots the number of Industrials Sector constituent stocks that are trading above their 50-day moving average.

Chart 10

Chart 12

The pink highlights on the chart show that this number has been declining since October from a recent high extreme of 60%, even as the Industrials Sector SPDR ETF (XLI, lower panel) has continued to rise.

The chart shows that previous retractions from the 60% area have coincided with or led most every decline in this ETF during the past year.


With the S&P 500 already up 25% year-to-date, and closing in on our next upside obstacle this morning (see today’s report entitled SPX Testing Its Next Overhead Obstacle, access requires subscription), we are closely watching the outright and relative performance of the Industrials Sector as an indication of whether or not an overdue US broad market correction may be in store later this month.

Asbury Research subscribers can view all of our latest research, including today’s Keys To This Week report in its entirety, by visiting our Research Center.