INDUSTRIALS SPDR HITS NEW HIGH -- UPS HITS NEW 52-WEEK HIGH -- HEWLETT AND HONEYWELL REMAIN DOW LEADERS

INCLUDES A LOT OF TRANSPORTS ... I recently wrote about the strong action in the Industrials Sector SPDR (XLI) (March 15, 2006). The headline in that piece was "Rails Lead Industrials SPDR to Record Highs". That's still the case. The purpose of that article was twofold. One was simply to highlight an ETF that was hitting a new record high and showing good relative strength. The other purpose was to point out that the XLI included a fair number of transportation stocks that were at or close to new highs as well. It also includes a number of industrial stocks that are also doing quite well. By including both industrials and transports, the XLI offers exposure to two groups for the price of one. I'm coming back to it today because the XLI is the only sector ETF that's hitting a new 52-week high. The monthly bars in Chart 1 show that the XLI is trading over 34 for the first time in its history. It's relative strength line is doing the same.

Chart 1

UPS HITS NEW 52-WEEK HIGH... While most transportation stocks in the XLI are at or near record highs, I thought the chart of UPS would be of some interest. The weekly bars in Chart 2 show the stock closing over its late 2005 peak at 79.45 to register a new 52-week high. The next upside target for the stock is its late 2004 high at 87.50. Its relative strength line bottomed last September and has been climbing ever since. Ryder is another transportation laggard that's starting to show better action. The weekly bars in Chart 3 show the stock touching a new 52-week high today. Its relative strength line also bottomed last September and has been climbing. Both stocks may provide a cheaper entry into the transportation rally and the XLI than the rails.

Chart 2

Chart 3

HEWLETT AND HONEYWELL REMAIN INDUSTRIAL LEADERS ... Back in February, I highlighted these two stocks as leaders in the Dow Industrials. They're holding on to that leadership status. Over the last week, Hewlett Packard has been the biggest Dow gainer (+5%) with Honeywell in third place (+2.8%). [General Electric came in second at +3%. I highlighted GE in the March 15 article when it rose over its 200-day average]. The next two charts show the continuing strong action in HON and HPQ. The monthly bars in Chart 4 show Honeywell touching a new 52-week high. During February, the Dow leader moved over 40 for the first time in nearly five years. Its relative strength ratio has also been moving slowly higher. Chart 5 shows an even stronger picture for Hewlett Packard. That stock is also trading near a new five-week high. Notice the upside breakout in its relative strength line that took place near the middle of 2005. The RS line is still rising.

Chart 4

Chart 5