SOX TRYING TO TURN UP -- NASDAQ IS SHOWING BETTER RELATIVE STRENGTH
TESTING 50-DAY MOVING AVERAGE... The Semiconductor (SOX) Index is up about 2% today and is the strongest part of the technology sector -- which is the day's strongest sector. The daily chart shows the SOX trying to climb above its (blue) 50-day moving average. A close above that level would be a positive sign. A close over 300 would also break the down trendline drawn over the December/January highs. The 14-day RSI line (along the top of the chart) has moved above the 50 level -- and has already broken its two-month down trendline. That's a good sign. Below the chart, the daily MACD lines have turned positive -- and have also broken their down trendline. Lastly, its relative strength line (vs. the S&P 500) has turned up. It's usually a good sign when the SOX is showing upside leadership.
Chart 1
INTEL PULLING SOX HIGHER... Because of its size, Intel is one of the most influential stocks in the SOX Index. It's therefore encouraging to see Intel leading the SOX higher. The daily chart shows that Intel has already cleared its 50-day average and its three-month down trendline. The RSI and MACD lines are positive. The price relative line (the lowest line) shows Intel outperforming the SOX Index since early January. That's a good sign for both. [Intel is the strongest gainer in the Dow today -- and is one of the day's most actively-traded stocks].
Chart 2
NASDAQ SHOWING BETTER RELATIVE STRENGTH... Although the market hasn't shown much direction during February, one of the positive developments has been the relative strength in the Nasdaq market. Research done by our money managemet team (at MurphyMorris Money Management) shows that the market usually does better when the Nasdaq is outperforming the big board (represented by the NYSE Composite Index). The (green) price relative line over the Nasdaq chart shows that the Nasdaq started to outperform the NYSE back in October as the market bottomed. Starting in early December, however, the Nasdaq started to lag behind (as the market fell). As February is ending, however, the Nasdaq/NYSE ratio line has hit a new three-month high. As long as the Nasdaq keeps outperforming the NYSE, it's a supportive influence for the entire market.
Chart 3
