BIOGEN LEADS BIOTECH RALLY -- AMAT LEADS SOX BOUNCE -- WAL MART STILL IN TRADING RANGE
BIOTECH INDEX HITS NEW HIGH... During January the Biotech Index broke through the 500 barrier to turn its major trend higher. Its relative strength line, which had been dropping since last June, started rising again during November. That was part of a new rotation into the healthcare sector. The BTK hit a new 52-week yesterday and is doing so again today. That's giving a boost to the Nasdaq market.

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BIOGEN IDEC BREAKS OUT... Biogen Idec exploded to a new 52-week high yesterday on monster volume. It was the biggest biotech gainer and one of the top performing Nasdaq stocks. The chart shows the biotech leader gapping higher yesterday hitting another new high today. The weekly bars in Chart 3 put the stock's action in better perspective. During January the stock had exceeded the highs from last spring in an early sign of an emerging uptrend. [Our January 21 market message pointed out the bullish Biogen breakout]. This week's explosive upmove puts the stock at the highest level in twenty-two months. The week's volume bar is also impressive. Biogen isn't the only biotech leader.

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OTHER BIOTECH LEADERS... The next three weekly charts show a few more stocks in the Biotech Index that are reaching for new 52-week highs. Affymetrix just recently broke through major resistance at 30 and hit another new high this week. Cephalon is moving up to challenge its late 2002 high. Protein Design Labs is climbing fast after recently clearing resistance near 20. All three stocks qualify as biotech leaders.

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AMAT SPARKS SOX RALLY... Early morning gains in Applied Materials and KLA Tencor are giving a boost the Semiconductor (SOX) Index. After gapping higher this morning, AMAT is trading near the bottom of today's price range. If today's jump is to have any staying power, the stock needs to clear the down trendlne drawn over its November/January highs near 24. A brokerage upgrade gave a boost to KLAC which is trying to get over its 50-day moving average. Chart 9 shows the SOX Index climbing to a three-week high and trading back over its 50-day line. The SOX/S&P 500 ratio has been dropping since early January, which reflects underperformance. The ratio line has been bouncing a bit since the start of February. We'll have to see if those new signs of relative strength continue.

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WAL MART STILL IN A BIG TRADING RANGE... Some good news from Wal Mart gave the big retailer an early boost today. The weekly bars in Chart 10, however, show that the stock is up against some formidable resistance. First is the down trendline drawn over the 2000/2002 peaks near 59. Second, and more important, is the highs of last year at 60. In my opinion, WMT would have to close decisively over 60 to break it out of its multi-year trading range. The relative strength line along the bottom has bounced a bit since the start of the new year, but has been in a downtrend for more than a year. Its RS line will have to do a lot better to make Wal Mart a market leader again.

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FOX THIS AFTERNOON, CNBC IN THE MORNING... I'm scheduled to be interviewed on FOX's "Your World With Neil Cavuto" this afternoon around 4:30 (NYT) and on CNBC's "Wake Up Call" at 6:50 tomorrow (Friday) morning. We'll be talking about my new book on "Intermarket Analysis" and the market in general. Tune in if you can.