MARKET ENDS WEEK ON STRONG NOTE -- CHEMICALS, INDUSTRIALS, AND OILS LEAD FRIDAY BOUNCE
DOW STAYS ABOVE 9,000... Of all the stock indexes we're watching, the Dow is in the most critical spot. That's because it was the last of the major indexes to breakout to the upside. And, it's been retesting its breakout point near 9,000. That's why it's important for it to hold over that level. Previous resistance levels should function as support on market pullbacks. The daily chart of the Dow shows it bouncing off 9,000 on Friday. Volume wasn't very impressive. But the ability to stay over 9,000 is encouraging. The daily RSI line is holding at the 50 level, which is another good sign. The daily MACD lines are still negative, but are converging. An upside crossing could signal the successful completion of the current consolidation. The weekly chart (Chart 2) puts the Dow trend in better perspective. It shows that the Dow has been consolidating for the past four weeks just above the highs set last August and November. The Dow is also holding above its 10-week (or 50 day) moving average. Its weekly MACD lines are still positive. Price-wise, although this week's action didn't do any damage to the intermediate uptrend, the Dow still needs to break out of its short-term trading range to signal a resumption of its uptrend. Friday's market was led by chemicals, industrials, and oil service.
Chart 1
Chart 2
CHEMICAL LEADERS... Upside volume wasn't a problem in a strong chemical group. Air Products and Chemicals surged on strong volume on Friday. APD and Rohm and Haas also cleared moving average resistance. APD is the closest to a potential upside breakout.
Chart 3
Chart 4
INDUSTRIAL LEADERS... The next two charts were Friday leaders in a strong industrial group. Both jumped on strong volume. Robert Half Intl. bounced off its 50-day line and is moving up to challenge its November high. Dover has already exceeded that chart barrier.
Chart 5
Chart 6
OIL SERVICE LEADERS... The PHLX Oil Service Index bounced impressively off its 200-day moving average. Two of the biggest percentage gainers also did so on strong volume. Two of the stronger looking charts belong to BJServices and Noble Drilling. BJS bounced off its 200-day average is is testing its 50-day line. NE closed over both moving average lines.
Chart 7
Chart 8
