In prior bull markets one of the groups that has shown strength near the end of the cycle is the manufacturing machinery and tools related industry. Strength in heavy capital equipment has extended aging bull markets in the past, but also hints at the risk-aversion and fatigue of a two year old bull market.

 

Seeing the movement today in the Machinery-Tool group (up 2.9%) as well as the Machinery – General Industrial group (up 1.8%) optimistically confirms the behavior we are seeing in the overall market. Both the S&P 500 and the NASDAQ are up almost 1% and are punching through the resistance of their year to date highs. Volume, however, is still mediocre. The type of stocks coming on now might suggest the uptrend could continue for a short time, but is a great reminder of where we may be in the current cycle.

 

Despite my trepidation regarding the weak volume and the age of the bull market, prices are rising. So this is certainly an environment where small gains could be made. But I wouldn’t be swinging for the fences this late in the game.

 

Best Returns,

 

Scott O’Neil

President

MarketSmith, Incorporated