FINANCIALS, TECH, AND TELECOMM LEAD MARKET HIGHER -- SHORT TERM INDICATOR TURNS BULLISH
FINANCIALS ARE STRONG... The Financials Select Sector SPDR is one of the day's strongest performers. Prices have climbed to a new monthly high -- and are nearing a test of the November high -- and 200-day moving averages. Banks and brokers are the two strongest groups. The Broker/Dealer Index has already exceeded its 200-day line. The rising relative strength sign shows new leadership coming from the financial sector.
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BANK AND BROKERAGE LEADERS... Two of the strongest bank stocks are Fleetboston and JP Morgan Chase. FBF is trying to break through its 200-day average and its November high. JPM has already accomplished both tasks and is the stronger of the two. In a strong brokerage group, Charles Schwab has completed a consolidaton phase (above its moving average lines) and is resuming its uptrend.
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TECHS AND TELECOMM ARE ALSO STRONG... Market leadership is also coming from technology and telecommunications. The Technology Select Sector SPDR has climbed to a new monthly high -- and is trading back over its 200-day line. The AMEX Telecommunications Index is even stronger -- having stayed over both moving averages during its recent pullback.
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TELECOMM LEADERS... Three standout telecomm performers are shown below. Bellsouth is breaking out to a new six-month high and is breaking its 200-day average. SBC Communications is doing the same. Verizon is the strongest of the three -- having consolidated above its moving average lines before resuming its uptrend today. Trading volume is also picking up -- which is another positive sign.
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TECH LEADERS... In a strong chip sector, Xilinx is showing good relative strength. Among the big techs leading the tech sector higher (on active volume), Cisco has climbed back over its 200-day line. Oracle looks even stronger -- having recently bounced off moving average support.
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JANUARY OFF TO A GOOD START -- DAILY MACD LINES TURN POSITIVE... All the major stock indexes are trading back over their 50-day lines, which is a positive sign. What's more, strong closes today would push their daily MACD lines into positive alignment for the first time in a month. A key ingredient in this week's rally attempt is volume. The market needs more volume to go along with the impressive price gains. The ability of the market to start the new year on a strong note may be a good omen for the year. The direction of the market for the first week of the new year carries some forecasting ability. The direction for the entire month of January, however, is a more important barometer for the rest of the year.
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