NIKKEI 225 TESTING 2002 HIGH NEAR 12K -- RAILS AND TRUCKS LEAD TRANSPORTS HIGHER -- SIMON PROPERTY LEADS REITS LOWER -- NOKIA TUMBLE PULLS TXN DOWN -- BDK, CMI, AND K HIT MULT-YEAR HIGHS --CONSUMER DISCRETIONARY ETF NEAR UPSIDE BREAKOUT

DOW TRANSPORTS HIT TWO-MONTH HIGH... While the rest of the market saw some profit-taking, transportation stocks continued to rise. The Dow Transports rose above their February peak to reach the highest level since late January. Its relative strength continues to rise as well. Today's biggest push came from rail and trucking stocks. In the trucking group, J.B. Hunt Transport Services broke out to a new all-time high on rising volume (Chart 2). Burlington Northern was the rail leader. Chart 3 shows BNI rising impressively through its 50-day moving average. It's usually a good sign for the economy when the rails and truckers are on the move.

Chart 1

Chart 2

Chart 3

SIMON PROPERTY GROUP FALLS WITH REITS... As was the case yesterday, Real Estate Investment Trusts were the day's biggest losers. The AMEX Realty Major iShares has tumbled under its 50-day moving average on another day of heavy trading. The biggest stock in that ETF is Simon Property Group, which broke its 50-day line today on rising volume. The prospect of higher interest rates continues to take a heavy toll on this rate-sensitive group.

Chart 4

Chart 5

NOKIA TUMBLES... Nokia tumbled 18% today and cast some gloom over the entire tech sector. Its daily chart shows the world's biggest mobile phone maker collapsing under its 200-day moving average on massive volume. One of the techs caught in the downdraft was Texas Instruments which fell back beneath its 50-day line on rising volume. That caused some profit-taking in the Semiconductor (SOX) Index. The SOX backed off from initial resistance at its early March high but stayed over its 50-day average.

Chart 6

Chart 7

Chart 8

BLACK & DECKER, CUMMINS, AND KELLOGG ARE BIG WINNERS... Upward guidance from the three stocks shown below pushed all three to multi-year highs on strong volume. Black & Decker jumped to the highest level in five years. Cummins passed its 1999 peak to reach the highest level since 1997. Kellogg has moved above its 1999 high at 40. All three stocks appear capable of reaching their all-time highs.

Chart 9

Chart 10

Chart 11

CONSUMER DISCRETIONARY ETF TESTING HIGH... With a lot of help from the retail group, the Consumer Discretionary Select Sector SPDR appears to be on the verge of setting a new high. Its relative strength line has been rising faster than the S&P 500 since early February. Black & Decker (chart 9) is one of the upside leaders. Three others are Jones Apparel, Limited, and Snap On Holding. All three are at or near new 52-week highs. The monthly bars in Chart 16 show that Snap On is also on the verge of breaking through its 2002 peak.

Chart 12

Chart 13

Chart 14

Chart 15

JAPAN TESTING 12K... Japan remains the strongest of the world's developed stock markets. The Nikkei 225 closed just above 12,000 for the first time since the spring of 2002. Its weekly bars shows that this is a major test for the rising Japanese market. A decisive close through that major resistance barrier would be further confirmation that the Japanese market in the midst of a major upturn. The rising relative strenght line shows that the Nikkei has been outperforming the S&P 500 for the past year. Add to that a rising yen and Japan is becoming a more attractive home for foreign investors.

Chart 17