FINANCIALS LEAD MARKET HIGHER -- FALLING OIL PUSHES TRANSPORTS TO NEW RECOVERY HIGH
BANKS AND BROKERS ARE STRONG... The Financial sector is up over 1% today and is the day's strongest group. Chart 1 shows the Financials Select Sector SPDR hitting a seven-week high this morning and moving up to challenge the summer highs. Earlier in the week we showed that the index of brokerage stocks had reached a new 52-week high. They're doing it again today and, as a group, the brokers are up over 2%. Bank stocks are also joining in the financial rally. Chart 2 shows the Bank Index (BKX) breaking through initial resistance and its 50-day moving average. Banks are up 1.50% as a group. Individual financial leaders today are Countrywide Financial, Charles Schwab, and State Street Bank.
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Chart 2
FINANCIAL LEADERS... The next three charts show three of today's biggest financial gainers. Countrywide Financial has risen to a three-month high on rising volume. Charles Schwab has broken through its summer highs. State Street Corp is doing the same. The weekly bars in Chart 6 shows STT to be at a crucial chart juncture. That's because the stock may be on the verge of breaking through its late 2002 peak near 48. A close above that chart barrier would be a bullish sign for the stock.
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FALLING OIL PUSHES TRANSPORTS TO NEW RECOVERY HIGH... Yesterday we did a bearish analysis of crude oil and energy stocks. We've said repeatedly that a weak energy patch is bullish for transportation stocks. That's why it's no surprise to see the Dow Transports hitting a new 52-week high today. It's the strongest of the three Dow averages. Thank falling oil for that.
Chart 7
