With poorly received earnings reports from 3M (MMM) and Caterpillar (CAT) and general weakness overall, Tuesday was just a bad day for the Industrials sector. Just five stocks in the sector were up on the day and the sector overall was down 2.2% compared to the S&P 500 which was down just 0.3%.
The chart below shows the daily performance spread between the S&P 500 and the Industrials sector over the last year. Positive readings indicate the S&P 500 outperforming the Industrials sector and negative readings indicate that the Industrials sector outperformed the S&P 500. With the S&P 500 outperforming the Industrials sector by 1.88 percentage points on Tuesday, it was the widest performance gap (in the S&P 500’s favor) since 9/21. Even more notable, though, was the fact that there have only been three other days in the last year where the Industrials sector underperformed the S&P 500 by a wider margin.
For the sector as a whole, it currently finds itself in a precarious position. After breaking its uptrend off the March lows on 9/21, the Industrials sector bounced back and rallied back to its former uptrend line, and while it just recently made a post-COVID high, the rally ran out of steam right at the former uptrend line. In the pullback that has followed, the sector closed yesterday right at a secondary line of support from the June lows. If this level doesn’t hold through today’s close, the technical picture for the sector will look a lot different than the way it looked just a few weeks ago. Click here for instant access to all of our research and interactive tools.