NEW YORK (TheStreet) -- The industrial products sector is 25% overvalued in a market where 83.2% of all stocks are overvalued with 51.4% overvalued by 20% or more. Within this sector there are 342 stocks and 40.9% are rated sell or strong sell according to www.ValuEngine.com. This gives the sector an underweight rating.
In this market environment I have identified seven industrial products companies that are rated sell and overvalued by 30.6% to 65.1% including Manitowoc (MTW - Get Report) and H&E Equipment (HEES - Get Report) which are the most overvalued.
The industrial products sector gained 38.4% over the last 12 months and five out of seven in today's post gained 49.5% to 120.8% with Taser (TASR) the best performer.
All seven of these stocks are trading above their 200-day simple moving averages which reflect the risk of reversion to the mean in 2014.
If you own any of the stocks in today's post consider taking profits now! If you want to keep an investment exposure to this sector re-invest a portion of the proceeds into the Industrial Sector SPDR Fund (XLI) ($50.24) in a strategy to underweight this sector. My semiannual value level is $43.08 with semiannual and monthly pivots at $49.14 and $49.96 and quarterly and weekly risky levels at $50.44 and $51.80. The industrial ETF set an all-time intra-day high at $50.77 on Nov. 29 and has been above its 200-day SMA all year which is now $44.96. Beware that the weekly chart of the industrial sector fund is extremely overbought in a parabolic formation I consider a bubble formation with the five-week modified moving average at $49.51.