LOWES LEADS RETAIL RALLY -- NASDAQ 100 TURNS UP WITH HELP FROM BIOTECH GROUP

RETAIL HOLDERS TEST RESISTANCE LINE... In an article on Regional Banks Holders last Wednesday, I incorrectly used the symbol RTH instead of the correct RKH. I showed the right chart, but typed the wrong symbol. Maybe my subconscious mind was at work because today I'm writing about the RTH which is the correct symbol for Retail Holders. The reason I'm writing about Retail Holders today is because they're one of the day's strongest groups. When I last wrote about the retail group on February 14, Home Depot was the star. Today it's Lowes. The more important point is that the chart of the Retail Holders has a bullish look to it. Chart 1 shows a "triangular" shaped pattern that's been in effect since last summer. [The triangle is marked by two converging trendlines and, in this case, is a bullish pattern]. The RTH is testing the upper resistance line drawn over the July/November highs. A decisive close above that resistance line would be a bullish sign for the retail ETF. The relative strength line beneath the chart shows that retailers have been underachievers over the last eight months. The RS line, however, appears to be turning up (blue arrow). Chart 2 shows an even stronger chart for Lowes Companies which is the day's strongest retailer. The stock has gapped up on very strong volume and is headed for test of late-2005 high. A move through that previous peak would put the stock at a new record high. The stock's 5% gain makes it one of the day's S&P leaders. That can also be seen in its RS line which is rising. Notice also that the RS line in Chart 2 has bounced off chart support at its late-2005 low.

Chart 1

Chart 2

NASDAQ 100 IS TURNING UP ... Last Wednesday I wrote an article to the effect that the Nasdaq 100 Shares (QQQQ) appeared to be turning higher. That was based partially on its ability to bounce off its early January low and upturns in some short-term momentum indicators. A requirement for a short-term buy signal was a close at 41.60 or higher. That would put it back over its 50-day moving average and its mid-February peak at 41.55. Chart 3 shows that the QQQQ is trading over both resistance barriers in afternoon trading. I'd like to see volume pick up to support the price advance. If the QQQQs are able to hold onto this gain through the rest of the afternoon, today's action will constitute a short-term buy signal. I also suggested that an upturn in the QQQQ would support the rest of the market. And it appears to be doing that as the S&P 500 is hitting a new 52-week high. The Nasdaq market is also getting help from a strong biotech group that's hitting a new 52-week high today (Chart 4).

Chart 3

Chart 4