AUTOS HELP DRIVE MARKET HIGHER -- RIDING THE RAILS TO NEW 52-WEEK HIGHS

FORD JUMPS ON STRONG VOLUME... Auto stocks helped drive the market higher today and Ford was the star of the day. Chart 1 shows the stock jumping 1.62 points in heavy trading. It was one of the top percentage gainers in the S&P 500. The relative strength line shows new leadership by Ford starting during December. The monthly bars in Chart 2 put today's rise in better perspective. A long-term down trendline appears near 20. That looks like the next upside target. The monthly RSI line has just risen over 50 -- and the monthly MACD lines are positive. General Motors also had a good day and rose over $2 to a 52-week high. GM was the top percentage gainer in the Dow. The monthly bars in Chart 3 show that GM has already broken its major down trendline. The next resistance barrier for GM is in the mid 60s.

Chart 1

Chart 2

Chart 3

RAILS POWER AHEAD... Rail stocks had a strong day. Norfolk Southern hit a new 52-week high. Chart 4 shows the stock heading for a test of its early 2002 peak near 27. Union Pacific did even better. That rail stock powered to the highest level in six years. The relative strength lines beneath both rail stocks have started to turn higher.

Chart 4

Chart 5

MARKET WRAPUP... The Dow Industrials continue to lead the market higher. A gain of 59 points today puts it at a new recovery high. By contrast, the Nasdaq gained only 4 points. Big board breadth was positive, while Nasdaq was negative. Volume was light which is normal for holiday trading. Basic Materials were the day's top sector. The dollar hit another record low today and gold gained $1.40. Warm weather in the northeast caused profit-taking in the energy pits, which contributed to a drop in the CRB Index. The CRB Index continues to meet resistance at its 1996 high near 260.