After being a relatively poor performer over the last year, the industrial goods sector is experiencing a resurgence. It has been one of the top performing sectors over the last three months with four stocks doing especially well. Industrial stocks generally perform well during the later stages of an economic decline and during the early stages of recovery. Therefore, with the industrial goods sector being one of the top performers over the last three months, it may be interpreted as a good sign that the economy is recovering. Over the last three months, the SPDR S&P 500 ETF (NYSE:SPY) is up 6.73% to $124.86, from $116.99. Over the same period, the SPDR Industrials ETF (NYSE:XLI) has outperformed - up 10.42% to $33.71, from $30.53. Four large capitalization stocks have been leading the sector higher and still present opportunities.

Rockwell Automation (NYSE:ROK) is up 30.5% in the last three months to $74.62, from $57.18. The chart shows the stock's recent turn-around. It has moved above the 50-day moving average and is currently challenging the 200-day moving average and also a recent high at $76.49. If the price can break above the recent high and also the 200-day moving average, the trade sets up well for a run at $80, followed potentially by $90 - two key resistance levels. Alternatively, a drop back below the 50-day moving average indicates the stock is weakening. (For more, see Moving Averages Introduction.)

Fastenal Company (Nasdaq:FAST) is close behind, up 29.11% to $41.60, from $32.22 just three months ago. The stock is at 52-week-high levels and support is at $38. After creating a recent high, it is possible the stock may pullback in the short-term, as indicated by the currently declining on-balance volume. The stock still remains in a strong long-term uptrend, though, signaling further potential upside toward $46.

Parker Hannifin (NYSE:PH) is up a solid 20.63% in the last three months to $82.11, from $68.07. The stock sold off in July and August but has managed to recover much of the loss. The stock trades very close to the resistance level at $85.84. A rise above $86 would confirm an upside breakout and the potential for the stock to test the 2010 high at $99.40. Ideally, on-balance volume should also break above resistance, but the indicator still remains depressed from the mid-year decline. Support is at $75, and a drop below would signal potential weakness.

Tyco International (NYSE:TYC) has also had a good three-month performance, up 19.3% to $47.48, from $39.80. This stock too saw an an aggressive mid-year decline but has been exhibiting strength recently. Since mid-August, the stock has been moving higher in a choppy fashion, providing ample opportunity to buy pullbacks. The entry point is between $45 and $44, as this is currently where the 50-day moving average intersects, and support is provided by the short-term upward sloping trendline. A relatively tight stop can be used, as a drop back below $43 indicates potential weakness. On the other hand, a rise above $48.50 is likely to bring about a test of the resistance areas at $50.50, $52 and $53.38 (the 2010 high).

The Bottom Line
Industrial stocks often perform well when the economy is in recovery mode, therefore, these stocks can provide a barometer for the broader market. If these stocks continue higher, it is not only positive for those owning these stocks but the market in general. As these stocks recover, they will need to break through resistance and ideally do so with on-balance volume rising. If these stocks decline below support, it indicates weakness and likely weakness for the sector as a whole. (For more, see Technical Analysis: Introduction.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Charts courtesy of

At the time of writing, Cory Mitchell did not own shares in any of the companies mentioned in this article.

Related Articles
  1. Mutual Funds & ETFs

    ETF Analysis: iShares Asia 50

    Read more about BlackRock's iShares Asia 50 Fund, an ETF that follows the four "Asian Tiger'' nations plus China.
  2. Mutual Funds & ETFs

    ETF Analysis: WisdomTree International LargeCp Div

    Learn more about the WisdomTree International LargeCap Dividend fund, an income-based international equities ETF that focuses heavily on the United Kingdom.
  3. Chart Advisor

    ChartAdvisor for September 4 2015

    Weekly technical summary of the major U.S. indexes.
  4. Mutual Funds & ETFs

    ETF Analysis: United States Gasoline Fund

    Learn about the United States Gasoline Fund, the characteristics of the exchange-traded fund, and the suitability and recommendations of it.
  5. Mutual Funds & ETFs

    ETF Analysis: United States 12 Month Oil

    Find out more information about the United States 12 Month Oil ETF, and explore detailed analysis of the characteristics, suitability and recommendations of it.
  6. Mutual Funds & ETFs

    ETF Analysis: ProShares Ultra Nasdaq Biotechnology

    Find out information about the ProShares Ultra Nasdaq Biotechnology exchange-traded fund, and learn detailed analysis of its characteristics and suitability.
  7. Mutual Funds & ETFs

    ETF Analysis: Direxion Daily S&P Biotech Bull 3X

    Learn more about the Direxion Daily S&P Biotech Bull 3x exchange-traded fund, a new triple-leveraged ETF tracking biotechnology equities.
  8. Mutual Funds & ETFs

    ETF Analysis: First Trust Health Care AlphaDEX

    Learn more about the First Trust Health Care AlphaDEX exchange-traded fund, an indexed fund that uses an advanced stock selection methodology.
  9. Forex Strategies

    Two Great Currencies To Profit From Oil Volatility

    U.S. dollar crosses with Canadian and Australian dollars offer easy access to crude oil trends due to their tight correlation with energy futures.
  10. Investing

    Redefining the Stop-Loss

    Using Stop-losses for trading doesn’t mean ‘losing money’, but instead think about the money you'll start saving once you learn how they work.
  1. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets ...
  2. Exchange-Traded Mutual Funds (ETMF)

    Investopedia explains the definition of exchange-traded mutual ...
  3. Fintech

    Fintech is a portmanteau of financial technology that describes ...
  4. Indicator

    Indicators are statistics used to measure current conditions ...
  5. Intraday Momentum Index (IMI)

    A technical indicator that combines aspects of candlestick analysis ...
  6. Lion economies

    A nickname given to Africa's growing economies.
  1. Can mutual funds invest in IPOs?

    Mutual funds can invest in initial public offerings (IPOS). However, most mutual funds have bylaws that prevent them from ... Read Full Answer >>
  2. Tame Panic Selling with the Exhausted Selling Model

    The exhausted selling model is a pricing strategy used to identify and trade based off of the price floor of a security. ... Read Full Answer >>
  3. Point and Figure Charting Using Count Analysis

    Count analysis is a means of interpreting point and figure charts to measure vertical price movements. Technical analysts ... Read Full Answer >>
  4. What assumptions are made when conducting a t-test?

    The common assumptions made when doing a t-test include those regarding the scale of measurement, random sampling, normality ... Read Full Answer >>
  5. What does a high turnover ratio signify for an investment fund?

    If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a one-year period. ... Read Full Answer >>
  6. Does index trading increase market vulnerability?

    The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>

You May Also Like

Trading Center

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!