MARKET OFF TO A GOOD START -- LED BY TECHS AND LARGECAP GROWTH STOCKS
DOW MAY BE STARTING SECOND UPLEG... Yesterday afternoon's bounce carried into today's trading and is starting to look like the start of another upleg. The Dow is gaining 185 points and could be poised to re-challenge its 200-day average and the highs of two week's ago. Intermarket forces are also turning more positive. Oil fell below $30 yesterday and is down again today. Gold prices are also sharply lower. Gold and oil stocks are the day's biggest losers. Bond prices are lower (the yield on the 10-year T-note is back over its 50-day average). Some of the top performing groups are biotechs and financials. Semiconductors are leading the technology higher. The Nasdaq is the biggest percentage gainer.
Chart 1
NASDAQ GAPS OFF 200-DAY AVERAGE... The last time we looked at the Nasdaq it had gapped down to its 50- and 200-day moving average lines. Today's it's "gapping" off those lines. That's good for two reasons. First, it represents a successful retest of those support lines. Secondly, it leaves a bullish "island reversal" pattern behind. We take that as a sign that the recent pullback has been completed and that a second upleg could be starting. The fact that the Nasdaq is leading the market higher is also a positive sign. The stocks leading the Nasdaq advance are the big techs -- like Cisco, Intel, Microsoft, and Oracle. So far, today's leadership can be seen in large cap growth stocks.
Chart 2
LARGE CAP GROWTH LEADING RALLY... We recently pointed out that the rally over the past month was being led by large cap growth stocks. They're leading again today. The chart shows the S&P Largecap 500 Growth Index trading over its 200-moving average. MORE LATER.
Chart 3
