WINNERS AND LOSERS FOR FEBRUARY
TECHS HAD A RELATIVELY GOOD MONTH... Chart 1 shows the NDX closing up for the month. The Nasdaq Composite did the same. They were the only two of the major stock indexes to gain during the past month. As we suggested earlier today, however, it's usually good for the rest of the market when the Nasdaq is leading. The NDX closed the week in another challenge of its 50- and 200-day moving average lines. A close above those resistance lines would give the market a boost next week.
Chart 1
NASDAQ 100 LEADERS... Over the past month, the next two tech stocks were the biggest percentage gainers in the NDX. Their rising relative strength lines (vs. the Nasdaq) shows them to be leaders in that group. Their chart action is also impressive. Nvidia recently jumped through its 50-day average on big volume. It bounced off that support line today -- also on good volume. Sanmina broke its 50-day line today on impressive volume. Its rising relative strength line also show it to be a Nasdaq leader.
Chart 2
Chart 3
SOX LEADERSHIP... The Semiconductor (SOX) Index was the top tech gainer for the month of February. Earlier today, we showed the SOX testing its 50-day average. Chart 4 shows it closing above that resistance barrier, which continues its upside leadership. Chart 5 plots a relative strength ratio of the SOX vs. the Nasdaq. Its RS line has broken the three-month down trendline. The SOX may be close to doing the same.
Chart 4
Chart 5
SOX STOCK LEADERS... The two top percentage gainers in the SOX are Linear Technology and Xilinx. LLTC is trading above its moving average lines -- and is nearing a test of its January high. Its rising relative strength line shows it outperformng the SOX. XLNX has also risen above both moving average lines -- and shows good relative strength. The level of volume in both stocks, however, still isn't very impressive.
Chart 6
Chart 7
XAU WAS WORST PERFORMER... In a reversal of roles, gold stocks were the worst performers during the month of February -- owing to a downside reversal in the gold market. A bounce in the XAU today accomplished two positive things. First, it kept it above the peak set back in early November. Secondly, it put it back over its 200-day moving average. The daily stochastic lnes look to be turning up from oversold territory under 20. Although the MACD lines are convering (which is good), they haven't turned positive yet. We'll have to see if today's bounce carries into next week. Gold prices bounced $4 dollars today to close just over $350.
Chart 8
GOLD STOCKS HAVEN'T BROKEN OUT YET... Yesterday, we showed that gold prices were in a downside correction after recently achieving a major bullish breakout. We think part of the bullion pullback is attributed to the failure of XAU to break out as well. The XAU monthly chart shows gold stocks still locked in an apparent basing pattern. We doubt that gold will make much more upside progress without bullish confirmation from the XAU. However, we remain optimistic that in time both will start moving back up together. We continue to believe the current pullback in gold stocks is an opportuntiy to do some quiet "accumulating". If we're right, there's a lot of upside potential. If we're wrong, we don't think there's a lot of downside risk. We believe the best way to play this group is to increase one's exposure in a gold or precious metal mutual fund.
Chart 9
NEW YORK TRADING EXPO THIS WEEKEND... We're going to be spending the weekend participating in the New York Online Trading Expo at the Marriott Marquis Hotel near Times Square. Stochcharts.com has a booth there -- where we'll be spending most of our time. I'm scheduled to do a four-hour workshop on Sunday morning from 8:00 to noon. Drop in if you're in the area. Even if you don't attend a workshop, it'll be time well spent. For more info, click on www.OnlineTradingExpo.com. Hope to see you there.
