Global Industrials: BofA Industrial Momentum Indicator ticks up again MoM

Research evidence excerpt

Global Industrials: BofA Industrial Momentum Indicator ticks up again MoM

BofA Industrial Momentum Indicator

The BofA Industrial Momentum Indicator is a proprietary tool for identifying major

inflection points for global industrial stocks spanning the US, European, and Japanese

Machinery, Multi-Industry, Transportation, and Aerospace & Defense sectors. We worked

with our Data Analytics team to create an indicator that is intended to lead Industrial

sales revisions, earnings growth, and the Global Manufacturing Purchasing Managers'

Index (Global Mfg PMI) on a two-month basis.

In our backtest period, Industrials generally underperformed the market in periods when

the BofA Industrial Momentum Indicator was falling and typically outperformed when

the Indicator bottomed and improved. This dynamic is also applicable when evaluating

cyclical versus defensive sectors.

Exhibit 5: BofA Industrial Momentum Indicator vs XLI (Industrial Select) relative performance

BofA Industrial Momentum Indicator foreshadows turns in relative performance

1.05 8.00

6.00

1.00 Indicator Performance 4.00

0.95

2.00 Relative 0.90 0.00 Momentum

SPDR

-2.00 Industrial Select 0.85 -4.00

0.80 -6.00 BofAML Industrial

0.75 -8.00

Jul-12 Jul-13 Jul-14 Jul-15 Jul-16 Jul-17 Jul-18 Jul-19 Jul-20 Jul-21 Jul-22 Jul-23 Jul-24 Jul-25 Jul-26

XLI Industrial ETF vs SPY S&P 500 ETF BofA Industrial Momentum Indicator [RHS]

Source: BofA Global Research, Backtested period = January 2012 through January 2019, actual performance since February 2019. This

performance is back-tested and does not represent the actual performance of any account or fund. Back-tested performance depicts the

theoretical (not actual) performance of a particular strategy over the time period indicated. No representation is being made that any actual