NASDAQ AND RUSSELL 2000 CONTINUE TO LEAD MARKET HIGHER -- THE DOW IS LAGGING

NASDAQ LEADERS... The Nasdaq touched another 52-week high and continues to lead the market higher. The first three charts show some of the day's biggest percentage gainers in the Nasdaq. Ciena soared to a six-month high on monster volume. That's a strong combination. RF Micro Devices closed above its 200-day moving average -- also on strong volume. Thirdly, Network Appliances hit another 52-week high. It also did so on rising volume. Some of the chip stocks had strong days as well as part of a strong semiconductor group.

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CHIP LEADERS... The chip bellwether -- Intel -- hit another 52-week high today on rising volume. Its daily chart shows it moving up to "fill" some overhead gaps in the 26-27 region. National Semiconductor jumped through its 50-day average on very heavy volume.

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BIOTECHS BOUNCE OFF SUPPORT... The last time we looked at the Biotech Index it was headed down for a test of its 50-day moving average. As the chart clearly shows, the BTK survived that test. As a result, the BTK appears to be turning back up again. The RSI line held near the 50 level. And the daily stochastic lines are positive once again.

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NASDAQ AND SMALL CAP LEADERSHIP... We like the fact that the market advance is being led by the Nasdaq and the Russell 2000. That's because technology leadership is a good thing. Smallcap leadership is good as well. Historically, smallcap stocks show upside leadership in the first year of a market bottom -- and the end of a recession.

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ENERGY UP, CONSUMER STAPLES ARE DOWN... Energy was the day's strongest group. Apache Corp. was one of the day's biggest gainers and is bouncing off its 50-day day moving average. Tobacco was the biggest drag on consumer staples. Atria gapped down on heavy volume. It was also the weakest Dow stock.

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DOW LOSES SOME GROUND... While the Nasdaq closed up a point, the Dow fell 66 points. Altria was a big reason for the loss. The Dow remains in a short-term trading range. The good news is that it's still above the 9,000 level and its 50-day moving average. We're also encouraged to see the RSI line staying over the 50 level. Unfortunately, the daily MACD lines are still negative.

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