Industrialized Momentum

Ian Saunders, Equity Analysis Manager, Nasdaq Dorsey Wright

Strong momentum market environments are built on consistent leadership trends. While the most recent bull market has been fueled by a tech focused AI boom, the industrials sector has quietly held strong relative strength metrics over the course of the last few years. The group has sat in the top half of the NDW DALI sector rankings since June 2022, showcasing its strength against the rest of the market. As of the time of this writing on 11/6, it remains a technical RS overweight alongside growth focused areas like technology and communication services. Since moving into the top half of the sector rankings just over three years ago, broad sector representative [XLI] is the one of three funds within the SPDR sector suite to outperform the broad S&P 500, gaining just over 78% as of 11/6/2025. 

As leadership trends persist, momentum is typically able to gravitate towards strength (and more importantly, avoid losers.) Over the last three years, the Invesco Nasdaq Dorsey Wright Industrials Momentum ETF ([PRN]) has put together a compelling technical picture as it focused on RS leaders within the sector. Since the industrials group moved into the top half of the DALI rankings (6/23/2022) the fund has gained over 125%, besting broad sector representative [XLI] and [SPX] by roughly 50% over the timeframe. It has pulled back to the middle of its respective trading band after breaking to new all time highs in October, sitting within 3.5% of localized support on its default chart. It earns a strong 5.37 fund score, outpacing the average score for both the sector (industrials) and equity class (US Large Cap) as we near the end of 2025. For the year, [PRN] has gained just under 18%.

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