TECHNOLOGY IS STRONGEST SECTOR ON WEEK -- ENERGY IS THE WORST
TECHNOLOGY BREAKS 200-DAY LINE... The Nasdaq 100 achieved its first Friday close above its 200-day average since last March. That's a good sign both for technology and the rest of the market. That's because the market is usually in better shape when technology is showing superior relative strength. The rising green line under the chart shows that to be the case since the October bottom -- and, more recently, since the start of the new year. The Nasdaq Composite also ended the week above its 200-day line.
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EMC IS TOP PERCENTAGE GAINER... The top percentage gainer for the week in the technology sector is EMC. Chart 2 shows that NYSE stock rising to a five-month high -- and closing over its 200-day average for the first time in two years. Other percentage leaders were Lucent, Network Appliance, JDS Uniphase, and Broadcom. Among tech sectors, the strongest weekly gainers were networking, software, and telecomm.
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CAPITAL ONE LEADS FINANCIALS HIGHER... Financial stocks also showed good relative strength this past week. The top percentage gainer was Capital One Financial. Chart 3 shows that credit card company jumping to a four-month high -- on rising volume. That sets the stage for a test of resistance along the September high (near 42) and the 200-day average. Other financial leaders were US Bancorp and Merrill Lynch.
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RIG WAS THE WORST OF THE ENERGY LOSERS... Energy stocks were the worst performers for the week. Transocean was the weakest of the energy stocks. Oil service stocks have been the weakest part of the energy patch. Natural gas stocks have been the strongest.
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FRIDAY TECH GAINERS... The Nasdaq 100 was the strongest index on Friday -- reflecting superior strength among larger technology stocks. One of the best Friday gainers was Ciena. The chart shows that tech leader moving over 7 to reach the highest level in eight months. Rising volume during the rally is another good sign. Oracle hit another recovery high on Friday. [In Thursday's update, we described its breakout as a 52-week high. Actually, it's a nine-month high. That's still pretty impressive].
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DELL IS BIGGEST FRIDAY LOSER... Dell was the biggest Nasdaq casualty on Friday. The computer maker tumbled on heavy volume -- and is now threatening its 200-day moving average. The stock recently failed a challenge of major overhead resistance in the 30-31 region.
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BASIC INDUSTRY STOCKS JUMP ON FRIDAY... Three of Friday's biggest winners in this group are shown below. FCX is trading over its August high -- and its 200-day average. The copper & gold stock is close to achieving a new six-month high. Phelps Dodge achieved a bullish breakout. Rising copper prices may be helping both stocks. USX - US Steel jumped to a five-month high -- on very strong volume.
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DOW HEADED TOWARD 9,000 -- IBM A LEADER... The Dow bounced off its (blue) 50-day average at mid-week to maintain its short-term uptrend. With daily and weekly indicators in positive mode, we expect the Dow to challenge major chart resistance (and its red 200-day average) near 9,000. The ability of the market to end the first week of the new year in positive territory is a positive omen for the remainder of the year. The ability of the market to shrug off this morning's disappointing employment report for December is another encouraging sign. Three of the Dow's strongest stocks during week were Hewlett Packard, IBM and Eastman Kodak. HPQ hit a new 10-month high, while IBM is getting close to doing the same. EK hit a new 52-week high, but still looks cheap historically.
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EASTMAN KODAK HITS 52-WEEK HIGH, BUT IS STILL CHEAP... Eastman Kodak hit a 52-week high this week. Lest anyone think that makes the stock expensive, the final chart should dispel that notion. The monthly chart shows EK breaking out of a basing pattern two months ago and continuing that new uptrend this month. Even with stock trading at 40, it's still less than half of the levels reached back in 1997 and 1998. This looks like just the start of a new uptrend.
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