Although investors have been favoring late-cycle, value sectors for much of 2014, the industrial sector has been surprisingly weak.
While not in the red, the Industrial Select Sector SPDR (NYSEArca: XLI) is the second-worst of the nine sector SPDR ETFs on a year-to-date basis. Only the Consumer Discretionary Select Sector SPDR (NYSEArca: XLY) has been worse.
Earnings season has brought some dark clouds to the industrial sector and for ETFs such as XLI and the Vanguard Industrials ETF (NYSEArca: VIS). Now, investors need to be mindful of deteriorating technicals for the sector. [Industrial ETFs Look Firm]
“This chart clearly represents the technical significance of this relative strength breakdown as both the intermediate and longer-term supports were violated. The former shows the downside resolution to this 8-month symmetrical triangle pattern (dotted lines). The second is the violation of a 2-year uptrend channel (solid lines),” according to J. Beck Investments.