INTEL AND MICROSOFT LEAD NASDAQ HIGHER
NASDAQ 100 LEADS BOUNCE... Our last update on Monday talked about the need for the Nasdaq to start showing some upside leadership. We got some of that yesterday -- and again this morning. The fact that the Nasdaq 100 is pulling the Nasdaq Composite higher is good news as well, since that tells us that the big tech stocks are leading the buying. Two of the biggest contributors are Intel and Microsoft. The Nasdaq 100 has been in a trading range for the past month. It recently retested the bottom of that range (and its 50-day average) where it met with new buying. Some encouraging overnight news in some of the big techs is causing a higher "gap" opening this morning. That suggests to us that the NDX may now attempt another run at its recent high. The daily stochastic lines have turned positive from oversold territory under 20. And, the daily MACD lines are close to doing the same. The strength in the big techs appears to be reasserting Nasdaq leadership over the broader market.
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NASDAQ REASSERTING LEADERSHIP... On Monday, we showed this chart as well. It's the ratio of the Nasdaq Composite Index divided by the NYSE Index. The ratio had been dipping for about a month, which was some cause for concern. We noted on Monday, however, that the ratio was in a potential support area defined by the January peak and its lower Bollinger Band. The good news is that the lower band held, and the ratio is trading back over its (dashed) 20-day moving average. Our work suggests that the market does better when the Nasdaq is outperforming. The upturn in the Nasdaq/NYSE ratio suggests the Nasdaq may be reasserting its market leadership.
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INTEL AND MICROSOFT LEAD NASDAQ RALLY... The two biggest contributors to the Nasdaq rally are Intel and Microsoft. Intel is "gapping" higher this morning and is exceeding initial resistance at 18. Microsoft has jumped back over its 200-day moving average. Some other tech gainers today are Altera, Applied Materials, EMC, Juniper Networks, and Texas Instruments. Most of those are in the semiconductor group which is up 4% today.
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