MARCH IS OFF TO A STRONG START -- ENERGY AND MATERIALS LEAD -- CRB HITS 20-YEAR HIGH -- COSTCO AND KBH BREAKOUT -- JAPAN RESUMES UPTREND

FEBRUARY IS OVER... The month of February, with its historically poor performance, is over and the month of March has gotten off to a good start. The Dow gained nearly a hundred points today and is now closer to the top of its February trading range. The Nasdaq had a bigger percentage gain and closed a shade over its 50-day moving average. The daily stochastic lines have turned up, and the daily MACD lines may be close to doing so as well. Volume figures were disappointing, but breadth was good. The big board saw advancers lead decliners by a three to one margin. The Nasdaq advancers led by a two to one margin. Small caps stocks also showed better relative strength. In fact, the S&P Mid Cap and Small Cap Indexes both hit new recovery highs. These are signs of new buying coming back into the market.

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ENERGY AND MATERIALS ARE TOP SECTORS... A strong rally in commodity markets is keeping commodity-related stocks in the lead. The CRB Index jumped 3.85 points today. Chart 3 shows the CRB trading at the highest level since 1984. Copper jumped 5.25 to a new eight-year high. Other big gainers were natural gas and silver. Gold gained $2.80 and crude oil jumped 70 cents to the highest level in a year. The AMEX Oil Index and the PHLX Oil Service Index reached new 52-week highs. Right behind energy stocks were basic materials with strong performances by new 52-week highs in US Steel, Nucor, Phelps Dodge, and Boise Cascade. Freeport McMoran Copper & Gold climbed above a three-month down trendline.

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HOMEBUILDERS BREAKOUT... Homebuilding stocks led a strong consumer group today. Chart 5 shows KBH breaking through its December peak to reach a new all-time high. Centex and Pulte are also trading in record territory.

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COSTCO BREAKS OUT... Another consumer stock that had an impressive upside breakout was Costco. The weekly bars in Chart 6 show the stock rising above its mid-2003 peak to reach a new twenty-one month high. That's pretty impressive.

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JAPAN RESUMES UPTREND... Strength in foreign markets set a positive tone for the U.S. market today. The most bullish performance was the 2% jump in the Nikkei 225 Index in Japan. The daily chart shows the Nikkei breaking through its October high to resume its uptrend. Its daily relative strength line is now outperforming the S&P 500 for the first time in more than four months. The weekly bars in Chart 8 shows that the next upside target for the Nikkei is its April 2002 peak near 1200. Today's upside breakout by the Japanese stock market should give a boost to stock markets all around the world.

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