BREAKOUTS IN TRANSPORTS AND UTILITIES INCREASE ODDS FOR DOW INDUSTRIAL BREAKOUT

DOW CHALLENGING 9000... Of the major averages, the Dow is the only one that hasn't broken out. We think that may be about to happen. The Dow is once again trying to break through the 9,000 barrier, which was the high set last December. It's trading slightly above that level this morning. Part of the reason we think a Dow Industrial breakout is likely comes from the fact that the two other Dow averages -- the transports and the utililities -- have already exceeded their December highs.

Chart 1

TRANSPORTS AND UTILITIES HAVE ALREADY BROKEN OUT... Charts 2 and 3 show the Dow transports and utilities having already exceeded their December high. The transports are trading at the highest level since last July. The utilties are challenging the highs of last August. Since all three Dow averages usually trade in tandem, we think the odds are very strong for an Industrial breakout over 9,000.

Chart 2

Chart 3

DOW COMPOSITE TURNS UP... The Dow Jones Composite Index includes the stocks in all three of the Dow Averages. The DJA has obviously broken through the highs of late last year -- and appears on the verge of exceeding the highs of last August. It looks like the entire group is moving higher. A decisive Dow Industrial close over 9,000 would be the final piece of the recent upside breakouts in the Dow group.

Chart 4