Our last look at the industrial stock sector of the S&P 500 universe found a steady decline in adjusted relative dollar volume flows leading up to the late February/early March market weakness. Since that time, we've seen a solid rebound in money flows, with recent readings well above the sector's 200-day moving average.The above chart shows that we've hit fresh price highs in the industrial sector ETF (XLI; blue line) and that dollar volume flows (pink line) are expanding and well above the average level (red line).
The five highly weighted stocks in XLI that I use to calculate the flows are GE, UPS, BA, UTX, and MMM. Each of the five is showing very positive relative dollar volume flows, and each is showing flows well above their 200-day moving average. MMM and UPS are showing the strongest inflows of the group; none are weak.
As long as institutions continue to put money to work in this sector, I'd expect to see higher prices in the near term. As a rule, we see a waning of inflows prior to significant sector tops.
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