RAILS LEAD TRANSPORTATION BREAKOUT -- INDUSTRIAL ETF ALSO BREAKS OUT -- CISCO LEADS NASDAQ HIGHER -- QQQ AND SPY BREAK RESISTANCE LINES
DOW TRANSPORTS EXCEED APRIL HIGH... The Dow Jones Transportation Average has broken through the previous peak formed during April, and is now on its way toward its January high. Its relative strength line has been rising since early March in another show of relative strength. Last week (June 2) I pointed out that a lot of the transportation strength was coming from the rails. That was the case again today. Burlington Northern Sante Fe and Norfolk Southern powered their way to new 52-week highs. The rail strength also helped power an upside breakout in the Industrials Select Sector SPDR.
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INDUSTRIAL ETF ALSO BREAKS OUT... This was the most impressive performance of the nine select sector SPDRs trading on the AMEX. The chart shows why. The XLI broke through its April high to reach the highest level in five months. It's the first of the sector SPDRs to accomplish that task. There are a lot of transportation stocks in this ETF, including the two rails shown above and UPS shown below. But it also got help from some other industrial leaders.
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INDUSTRIAL LEADERS... Three of the day's Industrial sector leaders are shown below. Boeing gapped up to another 52-week high. Danaher achieved a bullish breakout thorugh its 2004 highs. BF Goodrich was one of the top percentage gainers in the group. Chart 8 shows GR gapping to a six-week high on strong volume. It's nearing a test of its April high near 30. The relative strength line is also starting to rise after lagging behind the S&P 500 during May. Tyco International also hit a new 52-week high.
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CISCO HELPS POWER QQQ HIGHER... The Nasdaq 100 gained more than two percent today and led the rest of the market higher. Because of its size, the stock that had the biggest positive influence on the QQQ was Cisco. The large technology bellwether gained 4.7% and was the day's most actively-traded stock. That's a healthy combination. Chart 9 shows the stock climbing to an eight-week high and safely back over both moving average lines. Its relative strength line is also encouraging. The Cisco/QQQ ratio line has started to climb for the first time in more than five months. That's the kind of leadership the QQQs need. The Nasdaq 100 (QQQ) was the most actively-traded unit for the day.
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NADAQ 100 AND S&P 500 BREAK RESISTANCE LINES... Today's price action was impressive. The next two charts show why. The Nasdaq 100 (QQQ) and the S&P 500 SPDR (SPY) broke resistance lines extending back to their first quarter highs. That sets the stage for a run at their April highs. The rising ratio line under the QQQ chart also shows it leading the S&P 500 higher. That's another healthy sign for the market. Upside potential is better when the big Nasdaq stocks are leading the way.
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