CRB INDEX HITS 15-YEAR HIGH AS COMMODITIES SURGE--TELECOMM JUMPS AS SBC LEADS DOW--RYLAND BREAKS SUPPORT--SIEBEL LEADS NASDAQ HIGHER
CRB INDEX HITS 15-YEAR HIGH... Earlier today we showed the price of gold breaking out to a new 15-year high. Gold ended up $8.70 to close at 424.80. In a sign of how broad-based the commodity rally has become, the CRB Index also hit a 15-year high. The CRB Index jumped 5.58 today to close over 263. That puts the commodity index at a new closing high for this year as shown in Chart 1. Chart 2 paints an even more impressive picture. It shows that the CRB Index has exceeded the highest close during 1996, which puts it at the highest level since 1988. Fourteen of the seventeen commodities closed higher. The biggest gains were seen in metals and energy. Five of the top gainers were natural gas (+10%), heating oil (+5.7%), silver (+4.7%), copper (+3.9%), crude oil (+3.7%). Crude gained $1.23 to $33.75. The falling dollar was a big contributor to the precious metals rally. Forecasts for colder weather in the northeast contributed to the big gains in energy. The jump in commodities had a bullish impact on gold stocks, energy, and the Material sector which was one of the day's strongest groups. Two other leading groups today were Technology and Telecom. Homebuilders continued to sell off.
Chart 1
Chart 2
RYLAND BREAKS SUPPORT... On Friday, I showed the negative action in Ryland Group which was the day's worst homebuilder. The chart picture grew worse today. The daily chart shows Ryland breaking chart support along the lows of the past two months on rising volume. Toll Brothers has also turned down. The threat of rising interest rates is the main culprit. That's bad for housing stocks.
Chart 3
Chart 4
TELECOM BREAKOUT... I also wrote about new signs of strength in the beaten-down telecom sector. That new uptrend accelerated today. Chart 5 shows the AMEX Telecommunications Index surging to a 52-week high. The real story is the jump in its relative strength line.
Chart 5
SBC IS TOP DOW GAINER... Another sign of new telecom leadership is the fact that SBC Communications was the Dow's top percentage gainer today. The stock is moving up to challenge its June high. Its relative strength line (plotted against the Dow) has started to move higher. Two other telecom stocks we showed on Friday had strong days. Bellsouth broke out to a new yearly high. Verizon cleared its 200-day average.
Chart 6
Chart 7
Chart 8
SIEBEL LEADS NASDAQ HIGHER... Siebel Systems was the top percentage gainer in the Nasdaq today. Chart 9 shows the technology leader gapping to a new 52-week high on strong volume. Its relative strength line shows that stock started outperforming the Nasdaq market in early October. It's still doing it. The Nasdaq was the strongest part of the market. It also got help from a 3% gain in the semiconductor group.
Chart 9
S&P 500 TARGET... In previous messages, I've given upside targets for the Dow and the Nasdaq near their early 2002 peaks. Chart 10 shows the potential upside target at 1177 for the S&P 500. With the S&P reaching a new recovery high today at 1120, that target is still 5% away.
Chart 10
