One part of the market is facing industrial-sized problems, says top technician

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Stocks are trading at their highest levels since July, but one top technician is worried about a key piece of the market.

Investors are approaching the week of trading with measured confidence after last week's monster rally pulled stocks back to their highest levels since late July.

That area would, in fact, be the industrials. Carter Worth, head of technical analysis at Cornerstone Macro, stopped by ""This has been one of the areas that has been a hope trade," Worth said. "And as they say, when you're hoping, it's hopeless. It's not a thesis, it's nothing." "This line is the [2016] presidential election, and what you see is this big bump up in industrials, and here is the relative performance [to the]. It's called the 'Trump bump,' and it happened in financials and industrials," said Worth.

No matter how you slice it, the industrials are in rough shape from a technical standpoint. Negative alpha, stagnating absolute returns and a key resistance level seem to be conspiring against the space – and any traders with exposure to it.

 

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