CISCO AND MICROSOFT LEAD TECH RALLY -- GENERAL ELECTRIC LEADS BIG BOARD HIGHER
CISCO MOVES UP ON GOOD VOLUME... Cisco rallied to a new 52-week high today and was the most actively traded stock on the Nasdaq. Given the size of the stock, and its role as a Nasdaq bellwether, that was another encouraging sign for the technology sector. With Cisco having cleared the 20 level, Chart 2 shows the stock moving up to challenge the highs hit during 2001 in the 22-25 region. The On Balance Volume line along the bottom of Chart 2 has already exceeded that that barrier which is a sign of strength.
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MICROSOFT ALSO BREAKS OUT ON VOLUME... Microsoft also broke out on strong volume today. Chart 3 shows the big software stock clearing its July high on the heaviest volume in three months. The weekly chart shows MSFT moving up to challenge its January high just above 29. Its weekly On Balance Volume line is lagging behind the price action. That may change once we get back to a normal trading week.
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GENERAL ELECTRIC JUMPS ON VOLUME... Over on the big board, General Electric holds bellwether status. That being the case, today's big volume jump in GE was a good sign for the stock and the big board. GE jumped over 31 for the first time since mid-June (on very heavy volume) and is now in position to challenge that June high. The weekly chart paints a positive picture. The 10-week moving average is trading well over its 40-day average, which is a sign of an uptrend. The chart also shows that the next major upside objective is the 32.5 level, which was high formed last summer. The monthly chart plots Bollinger Bands, and shows that GE has broken through the 20-month average (the middle dashed line). That suggests a possible move to the upper band, which is currently near 36.
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NYSE BREAKS OUT ON HIGHER VOLUME... Yesterday we showed the S&P 500 breaking through its summer highs. Today, we're showing the NYSE Composite Index, which is an even broader measure of big board strength. Also encouraging is the fact that today's volume was even heavier than yesterday. The daily On Balance Volume line along the bottom of the NYSE chart has hit a new as well. That means the price and volume are in sync on the upside. Breadth was positive as well. That suggests that this week's bullish breakout has some staying power.
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