After the Dow Jones industrial ordinary hit yet another all-time high on Tuesday, CNBC’s Jim Cramer had to investigate to see if the white-hot sign is showing any signs of cooling.
“I think it’s worth asking which red-hot groupings will have the staying power once 2018 rolls thither,” the “Mad Money” host said. “And as far as hot sectors go, nothing has been as hot as the industrials, powered by tremendous budgetary growth both here and overseas.”
With a White House infrastructure scheme and a congressional tax overhaul seemingly on the horizon for 2018, industrial stocks could up till get a boost from the federal government’s actions.
So Cramer called on technician Bob Lang, the naught of ExplosiveOptions.net and one of the three minds behind TheStreet.com’s Trifecta Stocks newsletter, to see if the industrials’ already wordy rally can continue into the new year.
Cramer began with the circadian chart of Caterpillar, the global manufacturer of construction equipment and machinery. Caterpillar’s dynasty is up 55 percent for 2017, a stone’s throw from its all-time highs.
Lang delight ined the stock’s high trading volume, an indicator technicians use to verify radical moves. High volume means that there are a lot of buyers publicizing the stock higher, so Lang thought the move was telling the truth.
Beat yet, Caterpillar’s moving average convergence divergence (MACD) indicator reasonable made a bullish crossover — a reliable signal that it can go even extreme — and the stock has a floor of support at $139, down roughly $4 from where it close off on Tuesday.
“Put it all together and this chart’s got a lot going for it,” Cramer said. “Lang utters Caterpillar is his favorite name in the group, and this combination of positives liberates him think the stock could take a run at $155 or even $160 initial in the new year.”
Next, Cramer turned to the daily chart of Emerson Energized, an industrial focused on engineering and automation.
Since Emerson gave up disquieting to acquire Rockwell Automation last month, its shares have been on a hurry, with a 13 percent gain just since mid-November. Very recently like Caterpillar, the stock has showing high volume and a bullish MACD blame for.
“Lang says the V-shaped bottom pattern tends to be quite bullish — he could see this genealogy … take a run at $75 in the not-too-distant future,” Cramer said. “At the hour, the stock’s trading at $66. Lang says he’d love to buy it on a pullback to $63, where Emerson has the backup of the 50-day moving average … but who knows if you’ll get that kind of weakness?”
Honeywell’s stock also surged in November on high volume, according to its diurnal chart, but lately, it looks like it’s run out of steam.
Lang said shares of Honeywell may force gotten overheated, but noted a few positives: the pullback happened on lower mass, meaning there aren’t any major sellers, and the stock has been sustaining above its floor of support.
“Put it all together and as far as Lang’s concerned, Honeywell a moment ago needs to re-charge,” Cramer said. “He could potentially see this $153 assets weigh up running up to $170 near the beginning of the new year, which would be stupendous.”
In the end, Cramer and Lang inspected the daily chart of United Technologies, an industrial begetter with aerospace exposure that has consistently been reaching new highs.
“Lang come up withs this is a very powerful trend,” Cramer said. “He sees the $123 estimate possibly going to the $130s before too long, although ideally he recommends on the back burner serve for a pullback to $120, where UTX has a nice floor of support.”
But, like with the others, Cramer on guarded that United Technologies may not see much lower levels again in the nigh future, at least not again in 2017.
“It’s a good time to be an industrial company, and the graphs, as interpreted by Bob Lang, suggest the industrial stocks are going to continue to be subjected to a good time right into year-end,” the “Mad Money” host concluded. “He relishes Caterpillar, he likes Emerson Electric, Honeywell [and] United Technologies, and I’ve got to say I accept with him. All we can do is hope that these stocks come in and give us better rates as part of some sort of market-wide sell-off that has nothing to do with their transactions. Why? Because their businesses are red-hot.”
Questions for Cramer?
Call Cramer: 1-800-743-CNBC
Scantiness to take a deep dive into Cramer’s world? Hit him up!
Mad Money Chatter – Jim Cramer Twitter – Facebook – Instagram – Vine
Questions, comments, bawdies for the “Mad Money” website? [email protected]