BASIC MATERIALS AND TRANSPORTS LEAD THURSDAY RALLY ON MORE ECONOMIC OPTIMISM
TRANSPORTS HIT NEW RECOVERY HIGH... Of the three Dow Averages, the Transports are turning in the strongest performance. Chart 1 shows the Dow Transports hitting a new high for the year. Yesterday, we showed Ryder rallying as part of a rotation into cyclical stocks. Today's transport leaders are CTX, GATX, and Union Pacific. We take it as a positive sign when the transports are showing good relative strength. That's partly because they're cyclical in nature. And, also because rising transports usually coincide with falling energy prices.
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TODAY'S TRANSPORTATION LEADERS... We're showing today's tranportation leaders in order of their day's percentage gains. GATX is challenging its 200-day moving average and its April highs. Union Pacific is moving up on good volume to test its June high. CSX is headed in the same direction. Both stocks have climbed back above their 50-day averages.
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BASIC MATERIAL LEADERS... Another sign that the market is turning more optimistic on the economy is money flowing into basic material stocks, which are today's strongest sector. Dow Chemical is today's leader. The stock is breaking out to a 52-week high on rising volume. Its weekly chart shows that DOW is moving up to challenge the peak hit near the start of last summer. Phelps Dodge is hitting a new high as well.
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PHELPS DODGE HITS 52-WEEK HIGH... The big copper producer is also hitting a new annual high and on rising volume. Its weekly chart shows PD also moving up to challenge the highs set during the first half of last year. The strength in Phelps Dodge hints at corresponding strength in copper. Strength in copper hints at growing optimism in the global economy.
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