SEPTEMBER GETS OFF TO STRONG START -- ALL MARKET AVERAGES HIT NEW HIGHS ON STRONG VOLUME
VOLUME AND BREADTH ARE STRONG... The month of September got off to a roaring start today. Strong economic news at the start of the day pushed bond prices lower and stock prices higher. The dollar was also strong, while gold prices lost $3.00. One of the day's biggest stories was a $2.00 plunge in oil prices to below $30 a barrel. That gave a lift to airline shares. The stock market rally was once again led by the Nasdaq market and the small-cap averages. Breadth was positive on both the Nasdaq and the NYSE by a better than two-to-one margin. Two things were especially positive today. First, all the major stock averages hit new highs. That includes the S&P 500 which had been lagging behind. Second, volume picked up noticeably. Volume had been missing throughout the month of August. It returned today -- and it returned on higher prices.
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STOCK LEADERS... On the Nasdaq, Oracle was a standout performer. The stock rose impressively on heavy volume. On the big board, some of the top performers were Delta, Eastman Kodak, Ford, General Electric, and Goodyear.
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PLUNGE IN OIL LIFTS AIRLINES... Crude oil tumbled today. As a result, it closed below $30 for the first time since mid-July and broke both moving average lines. While that caused selling in energy shares, it probably accounted for today's bullish breakout in airline shares. Chart 6 shows the Airline Index hitting a new-52 week high today. The Dow Transports gained over 2% today and was the strongest of the Dow averages.
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ASIA IS LEADING THE WAY... Asian markets set a strong tone for today's trading in the states. The Nikkie 225 average in Japan hit a new 14-month high before we even started trading. What was even more striking was that the yield on the 10-year Japanese bond jumped to a 2-1/2 year high. That set the tone for a global rout in bond prices today as traders re-allocated out of bonds and into stocks all over the world. It's very encouraging to see Asia leading the global rally -- and especially Japan. That's where all the deflationary problems started over five years ago. For that reason, it's a good sign to see Japan rising again. The relative strength line below the Nikkei chart has been rising since the start of May. That means that Japan has been outperforming the S&P 500 since then.
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MONEY MANAGEMENT UPDATE -- INDICATORS SHOW IMPROVEMENT... Please take a look at the latest MurphyMorris Money Management Update, which was posted on Friday evening. It can be found in the yellow box at the upper right corner of the MurphyMorris.com home page. After weakening over the summer, there was marked improvement in virtually all of our Decision Model indicators. The most important was the Nasdaq market reasserting leadership over the NYSE. In addition, our breadth indicators turned positive again.
