BREWERS KEEP GETTING AHEAD -- SOME DOW BREAKOUTS -- JB HUNT SHOWS NEW TRANSPORTATION LEADERSHIP -- QUALCOMM LEADS NASDAQ 100 HIGHER -- BOUNCING YEN BOOSTS JAPAN ISHARES

BUDWEISER TESTS RECORD HIGHS ... Brewers have become consumer staple leaders. Last Friday I showed Molson Coors (TAP) breaking out to a new high (Chart 1). The beer stock is up 5% today and is the strongest stock in the Consumer Staples SPDR (XLP). Right behind it is Anheuser Busch (BUD) which is rising strongly on merger rumors. The monthly bars in Chart 2 show the brewer challenging its 2002-2004 highs. That puts it very close to a major bullish breakout. The solid line in Chart 2 is the BUD:SPX relative strength ratio. It's started rising for the first time in a long time. Beer is back in favor.

Chart 1

Chart 2

SOME DOW LEADERS ... A day after Deere hit a new all-time high, Caterpillar is rising 2.4% today to make it the Dow's strongest gainer. Chart 3 shows the stock rising above its 200-day moving average. The stock broke a nine-month down trendline a couple of weeks ago. The stock's relative strength line (versus the Dow) is starting to rise for the first time since last May. Two other Dow leaders are Boeing and United Technologies.

Chart 3

BOEING NEARS RECORD -- UTX IS ALREADY THERE ... Chart 4 shows Boeing testing its November/December highs. A close above that chart barrier would put the Dow leader at a new record. Upside volume has been picking up as has its relative strength line (versus the Dow). Chart 5 shows that United Technologies has already exceeded its late 2006 highs. After pulling back to the breakout point at 67, the Dow leader is hitting a new record high today. Its relative strength line shows that UTX has been helping lead the Dow higher since late December.

Chart 4

Chart 5

JB HUNT BREAKS OUT ... One of the advantages of looking at weekly and monthly charts is that it's much easier to spot important chart breakouts. In looking through the stock leaders that have helped push the Dow Transports to record highs recently, the next chart caught my eye. The weekly bars show JB Hunt Transport Services (JBHT) having just broken through its spring 2006 highs. Leadership by this transportation stocks is something new. The relative strength ratio (versus the Dow Transports) below Chart 7 has just broken a yearlong down trendline and is rising noticeably. That means that JBHT has gone from a transportation laggard to a new group leader.

Chart 6

FEDERAL EXPRESS MAY BE NEARING BREAKOUT... Another transportation laggard that's starting to bounce is Federal Express. The weekly bars in Chart 7 show the stock moving up to challenge its old highs around 119. The chart has the look of an inverse "head and shoulders" pattern which favors an upside breakout (see three circles). The "neckline" is drawn along the recent highs. The point & figure boxes in Chart 8 show that that the stock has been on a p&f buy signal since last September at 106. It now needs a close at 120 or high to complete the bullish breakout.

Chart 7

Chart 8

NASDAQ 100 HITS FOUR-WEEK HIGH... The Nasdaq market continues to gain ground -- both on absolute and relative strength grounds. Chart 9 shows the Nasdaq 100 Shares (QQQQ) closing at a four-week high today. The Nasdaq 100 cash index was the day's biggest percentage gainer (+.46%), followed closely by the Nasdaq Composite (+35%). By comparison, the Dow gained +.18% and the S&P 500 +.10%. Large-cap tech stocks are starting to exert some upside leadership again. One of them that's acting especially well is Qualcomm.

Chart 9

QUALCOMM SURGES ON STRONG VOLUME ... Yesterday, Arthur Hill listed Qualcomm as one of the big tech stocks starting to lead the Nasdaq market higher, and showed it closing above its 200-day moving average. It did even better today. The daily bars in Chart 10 show Qualcomm surging 4.16% to close over 41 for the first time in eight months. And it did so on very strong volume. As further proof of the new leadership coming from QCOM, the Qualcomm:QQQQ relative strength ratio below Chart 10 has also broken out to a new-four month high.

Chart 10

BOUNCING YEN HELPS EWJ ... My Tuesday message wrote about early signs of a bottom in the Japanese yen, and suggested that would give a boost to Japan iShares. The yen has shown significant improvement over the last two days. Chart 11 shows the yen jumping to a new five-week high today and completing a small "double bottom" in the process. Japanese iShares have surged to a new nine-month high (Chart 12). The orange line is a ratio of the EWJ to the S&P SPDR (SPY). The EWJ:SPY ratio has broken out to a new five-month high. That means that the EWJ is continuing to do better than the U.S. market (and has been doing so for the last three months). The weaker U.S. dollar is helping support the gold market which bounced again today.

Chart 11

Chart 12