GE BOOSTS DOW WHICH IS TESTING 200-DAY AVERAGE -- INTEL AND SOX TESTING MAY LOW -- INDUSTRIALS ETF IS STRONG
DOW BOUNCING OFF 200-DAY LINE... I mentioned yesterday that the Dow was testing long-term support at its 200-day moving average. In early trading, the Dow is up nearly 50 points and is bouncing off its 200-day line. It's getting a lot of help from General Electric which reported better than expected second quarter earnings.
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GE BOUNCES OFF APRIL HIGH ... General Electric has been a relatively strong performer for the Dow since early May as reflected in its rising GE/Dow ratio line. The blue chip bellwether is also finding new support along its April high, which is a good sign if it continues. GE is also trading well above its moving average lines. Intel is also at a crucial chart juncture and is helping to boost the Dow today.
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INTEL IS BOUNCING OFF MAY BOTTOM ... Intel is another key Dow stock that's helping lift the market today. The key chip and technology stock is bouncing off its previous bottom formed in early May. Its ratio line versus the Dow is also trying to turn up. Besides helping the Dow stay over its 200-day line, a bounce in Intel carries broader implications. It's helping keep the Semiconductor (SOX) Index from falling to a new 2004 low. Recent semiconductor weakness has weighed heavily on the Nasdaq market. If the SOX Index is going to stabilize, and attempt a rally, this is the logical place for that to happen. A move into new low ground would be a big setback for the Nasdaq and the entire market. In morning trading, the Nasdaq 100 is trying to climb back over its 200-day average. As I suggested yesterday afternoon, today is going to be an important chart day.
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GE ALSO HELPING INDUSTRIALS ETF... GE is also giving a boost to the Industrials Select Sector SPDR which has been showing good relative strength for the last few months. GE represents the largest holding in the Industrials ETF (20%). Other stocks boosting the XLI today are Caterpillar, Tyco, United Technologies, and two rails -- BNI and NSC.
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