DELL, INTEL, AND YAHOO PUT NASDAQ IN NEW LEADERSHIP ROLE -- DOW CLOSES BACK OVER 10K -- CYCLICALS BOUNCE OFF 200-DAY AVERAGE
NASDAQ LEADERS... Our midday Market Message talked about the Nasdaq showing new signs of upside leadership after pulling the rest of the market lower since January. For the first time in the new year, the technology-dominated Nasdaq market is holding up better than the rest of the market. That's a good sign -- if it continues. Three of the Nasdaq's top percentage gainers are shown below. VeriSign recorded the highest daily close in two months. Its relative strength line (measured against the Nasdaq) has turned up pretty dramatically. That makes the stock a Nasdaq leader. Chart 2 shows Intel closing over its 50-day moving average for the first time in four months. Notice the jump in its relative strength line as measured against the Nasdaq. That means that Intel is helping the Nasdaq for the first time this year. The upturn in Intel is also giving a boost to the Semiconductor (SOX) Index which is helping to lead the Nasdaq higher. Yahoo is also showing good relative strength and good chart action. Yahoo helped make the Internet group the top gainer in the Nasdaq market today.
Chart 1
Chart 2
Chart 3
DELL HITS SIX-MONTH HIGH ... Speaking of Nasdaq leadership, take a look at the chart of Dell. The stock broke through its January high to reach the highest level in six months. That puts the computer maker within a point of a new 52-week high. It's relative strength is equally impressive. It started rising versus the Nasdaq in early March and has been rising since then. Now that's leadership.
Chart 4
NASDAQ 100 CLOSES BACK OVER 200-DAY LINE... The Nasdaq market had the biggest percentage gain today. That was largely because of the strong performance of the Nasdaq 100 (QQQ). The QQQ has stayed safely above its March low which makes it an exception among the major stock indexes. It also closed back over its 200-day average today. Volume was disappointing. If the current bounce is going to have any legs, it's going to need more volume. The relative strength line along the bottom of the chart shows the QQQ doing better than the S&P 500 over the past week. This is first time that's happened this year. Nasdaq leadership is a good thing for the market -- if it continues.
Chart 5
THE DOW ENDS BACK OVER 10K... The Dow experienced a smaller bounce than the Nasdaq. But its 29 point gain put it back over 10,000 and its 200-day moving average. Here again, volume was very light and not very convincing. But at least it keeps the Dow out of bear market territory.
Chart 6
CYCLICALS BOUNCE OFF 200-DAY LINE... We've shown a lot of major stock indexes in the process of testing major long-term support at their 200-day moving averages. That line is important because it helps determine major trend direction. A decisive close under a 200-day moving average raises the odds of a new bear market in progress. Bull market corrections, however, usually find new support near that important line. The recent rise in rates took a heavy toll on economically-sensitive cyclical stocks. As a result, the Morgan Stanley Cyclicals Index fell to a five-month low and fell to its 200-day moving average. Add that to the list of important stock indexes that are in a cructial of major support. Its relative strength linen is also testing support along 2004 lows. The chart shows the cyclical group bouncing off its 200-day today. So far so good.
Chart 7
