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Machinery stocks, an important cyclical area of the stock market – and an important industry for the U.S. economy and the global economy – continue to “act poorly” as the old-time technical expression goes, with key constituents in the S & P 500 machinery industry group exhibiting bearish price-volume correlation and poor relative strength not only to the market, but to the sector in which they belong — the S & P 500 industrials sector. Year to date, the S & P 500 machinery group is up only 8% versus the S & P 500 industrial sector, which is up 12%. The S & P 500 itself which is up 16%. We remain underweight industrials generally, and machinery stocks specifically. And the largest of all, Caterpillar (CAT) , is at a critical juncture and we believe at risk of breaking down. We’re sellers here. Here’s S & P 500 machinery industry comprising 17 stocks with a total market capitalization of $764 billion: The 2-panel chart below depicts the S & P 500 machinery industry marking new highs the past 18 months, yet a series of lower relative highs to the market. Not good. Top Panel: S & P 500 Machinery Industry Group Bottom panel: Machinery’s Relative Performance to the S & P 500 Index Caterpillar chart below… we’re sellers here. -Carter Braxton Worth For actionable recommendations via email and live nightly videos become a member at worthcharting.com . DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
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