STOCK MARKET CLOSES HIGHER AFTER OIL SPIKE

OIL SPIKE HELPS ENERGY -- HURTS AIRLINES... Crude oil prices jumped $2.50 today to close over $42 for the first time ever. As is usually the case when oil is rising, energy-related shares were the big winners. The Energy Select Sector SPDR gapped higher today -- although on lighter volume. One of the groups hardest hit were the airlines. Chart 2 shows the Airline Index trading under its 50-day average. Financial stocks also came under some pressure from higher oil prices and rising bond yields. Major stock indexes were in the red throughout most of the day. A late rally, however, pushed most of them into positive territory. Volume was light. But, all things considered, it was a pretty impressive performance. Small caps were the biggest winners of the day, which is a continuation of that recent trend. The Nasdaq outperformed the big board indexes, which is another hopeful sign. Internet stocks led the technology bounce.

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STOCK INDEXES SUPPORTED AT 50-DAY AVERAGES... The Nasdaq Composite, the S&P 500, and the S&P 600 Small Cap Indexes found support at their 50-day moving averages -- as shown in the next three charts. They rose above those lines last week. It's good to see the 50-day lines acting as support. The small cap index (and mid cap) Index was the only one to reach a new recovery high.

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AMAZON BREAKOUT HELPS INTERNET... The IIX Internet Index shows the relative strength in that group. The IIX/Nasdaq ratio has broken out to a new high. Yahoo hit a new 52-week high. Amazon.com broke out to a four-month high. Its relative strength line broke out as well.

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A PRETTY GOOD DAY ... All things considered, the market turned in a pretty gutsy performance today. Normally, the record oil spike would have taken a bigger toll on the stock market. The fact that it didn't may be telling us something. Over the last week, we saw signs of improvement in the stock market as it recovered from long-term support near 200-day moving averages. New signs of leadership from the Nasdaq and small caps was another positive sign. The stock market bent a little bit today, but didn't break. The hourly bar charts for the S&P 500 and the Nasdaq show that both averages bounced off chart support formed last Thursday. Given the bad news in oil, I found that to be a pretty impressive performaance.

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