DOW CLOSES OVER 10K -- HOME DEPOT IS DOW LEADER -- SMALL CAPS AND INTERNET LEAD DAY'S BOUNCE
DOW CLOSES OVER 10K... The 15-minute bar chart shows the Dow finally crossing the 10,000 psychological barrier today. It crossed above that threshold just after 2:00 pm and withstood some selling late in the day to close 10008. That's not much of a penetration, but it counts in the record books. The Dow got a lot of help from the rest of the market. The Nasdaq gained 37 points and climbed back over its 50-day average. Techs were the day's top-performing sector for the first time in days. Small cap stocks also led the day's bounce. The Russell 2000 Index rose 2.7% and was the top index performer. Chart 3 shows the Russell 2000 bouncing off its 50-day average. Small caps have been big leaders all year. It's important that they maintain their uptrend as they did today. The U.S. dollar bounced today for the second day in row. Gold and other commodities pulled back a little as a result. Gold ended at $405 for a loss of $1.60. Gold stocks bounced back from yesterday's selloff.
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HOME DEPOT PACES DOW ADVANCE... Home Depot was the Dow's biggest gainer today. The stock has fallen pretty hard of late. It's daily chart, however, shows the home improvement stock finding chart support along its November low and its 200-day moving average. Its relative strength line shows that HD has been a Dow laggard for more than a month. Today it acted as a leader. The first barrier HD needs to overcome is the mid-November low at 35. Other Dow leaders today were Alcoa, Caterpillar, General Electric, and Altria Group (which hit a new 52-week high).
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DELL AND EBAY HELP NASDAQ... Given its large size, Dell was one of the biggest contributors to today's Nasdaq bounce. The daily chart shows DELL bouncing off its 200-day average. It needs to do a lot more, however, to restore its intermediate uptrend. EBay was another Dow leader as Internet stocks had a strong day. The stock hit a five-week high today. Chart 9 shows the IIX Internet Index bouncing nicely off its 50-day line.
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10K REALLY DOESN'T MEAN THAT MUCH... Aside from its psychological impact as an obvious round number, the 10K level doesn't hold that much technical significance. Having said that, it's encouraging to see the Dow finally cross that potential barrier. It'll be even better if it ends the week over 10K. Chart 10 plots Bollinger bands around a monthly Dow chart. If the Dow can stay over 10K, the next upside target is the upper band which is currently at 10,263. The next major resistance level after that is the early 2002 peak at 10673.
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