ALCOA ACHIEVES BULLISH BREAKOUT AFTER TAKEOVER OFFER -- TRAVELERS LEADS STRONG INSURANCE GROUP -- AIG AND CHUBB ARE ALSO RISING

ALCOA REACHES FIVE-YEAR HIGH ... Alcoa's takeover offer of Alcan Aluminum pushed both stocks sharply higher. Alcan surged 32% to a record high. Alcoa jumped more than 7% and was the market's star performer. The monthly bars in Chart 1 show Alcoa breaking through its early 2004 peak to put the stock at the highest level since 2001. And it did so on massive volume. That's a bullish breakout and helped make the basic materials groups the day's strongest market sector. Insurance stocks also had a strong day.

Chart 1

TRAVELERS HITS NEW RECORD HIGH ... Travelers led a strong insurance group higher today. The daily bars in Chart 2 show the stock breaking through its December highs to achieve a bullish market. Its relative strength (RS) line hit a new four-month high. It gets even better. The monthly bars in Chart 3 show that TRV has also exceeded its late 2000 peak near 52. That's a new record. Some other financial leaders in the insurance group were AIG and Chubb.

Chart 2

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CHUBB NEARS NEW RECORD -- AIG BOUNCES... The chart of Chubb shows a recent breakout above last October's high near 54. That put the insurance stock at a new record. The stock has been consolidating just above that breakout point and appears ready to resume its uptrend. Its RS line (top of chart) has just started to rise after falling for several months. AIG, which has been an insurance laggard, is also starting to attract some new attention. The daily bars in Chart 5 show the stock climbing more than a percent today and nearing a test of last December's high. The weekly bars in Chart 6 show that the stock is nearing a new three-year high. Its RS line may be finally showing signs of bottoming. AIG was the Dow's third top percentage gainer today.

Chart 4

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