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Gregory W. Harmon, CMT, CFA, and Founder and President of Dragonfly Capital Management, provides expert technical analysis of securities and markets. He has over 25 years of trading experience at BNP Paribas, State Street and JP Morgan.
I hear you all chuckling. The Industrial Select Sector SPDR, ( XLI), broke out over a week ago. Yes I know that. The daily chart below shows the breakout, back test and move higher. Old news. But
have you looked at the longer time frames? That is where the news, and real money, is to be made. The weekly chart below shows a break of a 18 month long symmetrical triangle this week. The target for the pattern break is a move to 46 nearly 20% higher. And it has support from a rising
and bullish Relative Strength Index (RSI) testing 18 month highs itself. And the monthly view (bottom) is looking very strong as well, less than 2% from breaking above 5 year resistance. The monthly view also has support from a rising RSI making new higher highs. You can play the ETF itself or the
Top 10 Holdings all look good as well with several, Honeywell (
HON), Caterpillar (
Emerson Electric (
EMR), General Electric (
GE) and UPS (
UPS) already breaking higher. But 5 of those top 10 are just at the breakout levels: Boeing (
BA), Deere (
DE), Union Pacific (
UNP), United Technologies (
UTX) and 3M (
MMM), and ready to go. Focus on the second list if you are not playing the ETF.