Investors should buy machinery companies “when uncertainty is very high and valuations are inexpensive,” said Kaplowitz, who maintains “overweight” recommendations on Caterpillar and engine maker Cummins Inc. While these businesses are “very global,” their U.S. operations remain strong and their stocks are trading at about 10 to 12 times earnings. In a more typical mid-cycle recovery, valuations would be about 13 to 15 times, he estimated.

Amid “more muted earnings expectations, these stocks still are at a 30 percent discount to where they should be,” Kaplowitz said. Investors who are comfortable with the associated risk could be well compensated because it won't take much improvement in the operating environment for the rally in this group to re-energize, he said.

Eoin Treacy's view From the 2009 lows stock markets enjoyed a broad-based rally until about 18 months ago, when a clear delineation appeared between companies highly exposed to global economic growth perceptions and those offering more exposure to the global consumer. What has been notable over the last few months is the position of relative performance the former group have returned to. Also see Comment of the Day on August 6 th 2012.

The S&P 500 Industrials Index retested the upper side of its two-year range in September and continues to pull back from that area. The pace of the decline is picking up and while 300 may offer a potential area of support a clear upward dynamic, held for more than a day or two, would be required to suggest a return to demand dominance.

General Electric, Berkshire Hathaway, Honeywell and 3M have pulled back to test the region of their respective 200-day MAs and will need to find support in this area if the medium-term upside is to continue to be given the benefit of the doubt.

Illinois Toolworks was inducted into the S&P500 Dividend Aristocrats this year and currently yields 2.58%. The share broke upwards to new all time highs in September and has been consolidating above the underlying base since. It posted a downside weekly key reversal last week and followed through this week suggesting that at least some additional time will be required for the share to build support before higher prices can be sustained.

Eaton Corp, Ingersoll Rand and Parker Hannifin have held up well over the last few weeks but are susceptible to a further test of underlying trading in the absence of clear upward dynamics. Flowserve Corp retested its 2008 peak last week and is now unwinding its short-term overbought condition.

Cooper Industries continues to hold its progression of higher reaction lows and a sustained move below $70 would be required to question medium-term scope for additional upside.

Roper Industries found support last week in the region of the MA and the psychological $100. Provided it continues to hold above that area, the benefit of the doubt can be given to the upside. From the 2009 lows stock markets enjoyed a broad-based rally until about 18 months ago, when a clear delineation appeared between companies highly exposed to global economic growth perceptions and those offering more exposure to the global consumer. What has been notable over the last few months is the position of relative performance the former group have returned to. Also see Comment of the Day on August 6 th 2012.

The S&P 500 Industrials Index retested the upper side of its two-year range in September and continues to pull back from that area. The pace of the decline is picking up and while 300 may offer a potential area of support a clear upward dynamic, held for more than a day or two, would be required to suggest a return to demand dominance.

General Electric, Berkshire Hathaway, Honeywell and 3M have pulled back to test the region of their respective 200-day MAs and will need to find support in this area if the medium-term upside is to continue to be given the benefit of the doubt.

Illinois Toolworks was inducted into the S&P500 Dividend Aristocrats this year and currently yields 2.58%. The share broke upwards to new all time highs in September and has been consolidating above the underlying base since. It posted a downside weekly key reversal last week and followed through this week suggesting that at least some additional time will be required for the share to build support before higher prices can be sustained.

Eaton Corp, Ingersoll Rand and Parker Hannifin have held up well over the last few weeks but are susceptible to a further test of underlying trading in the absence of clear upward dynamics. Flowserve Corp retested its 2008 peak last week and is now unwinding its short-term overbought condition.

Cooper Industries continues to hold its progression of higher reaction lows and a sustained move below $70 would be required to question medium-term scope for additional upside.

Roper Industries found support last week in the region of the MA and the psychological $100. Provided it continues to hold above that area, the benefit of the doubt can be given to the upside.