BANK INDEX (BKX) CHALLENGING KEY RESISTANCE BARRIER -- TELECOMM AND WIRELESS LEADERS
BKX POISED FOR UPSIDE BREAKOUT?... The Bank Index (BKX) is currently testing a key resistance barrier near the 800 level . Prior attempts to surpass this area have failed. However, in the three prior attempts the BKX was trading under its 200-day moving average. This time the picture looks somewhat brighter. The BKX is approaching this key barrier accompanied by positive MACD lines and is trading above its 200-day, both of which are good signs. This test is important because strength in the Financial industry is a key factor for a strong market.
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FINANCIAL BREAKOUTS... A couple of financial stocks enjoyed bullish breakouts today -- on heavy volume. Amsouth Bancorp surged through its 200-day average on big volume. In insurance, Travelers broke out to a five-month -- on the highest volume since last October.
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ALCATEL AND ERICCSON HAVE STRONG DAYS... Telecom and wireless stocks were among the day's leaders. The two stocks charted below are part of the reason why. Alcatel gapped to a six-month high -- on heavier volume -- and cleared its 200-day average. On the Nasdaq, Ericsson also jumped on much heavier volume.
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MAJOR AVERAGES GAIN MORE GROUND... The Nasdaq Composite led the rest of the market higher today by gaining almost 15 points. The volume, however, left something to be desired. The Dow gained 56 points to end the day at 8842. The puts the Dow within 77 points of its 200-day moving average. We expect the averages to challenge their recent peaks near 1500 in the Nasdaq and 9,000 in the Dow.
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