STOCKS AND COMMODITIES CONTINUE THEIR SPRING RUN -- THE S&P 500 TRADES OVER ITS 200-DAY AVERAGE FOR THE FIRST TIME IN A YEAR -- DOW INDUSTRIALS AND TRANSPORTS NEAR TESTS OF THEIR 200-DAY LINES

S&P 500 TRADES OVER 200-DAY AVERAGE ... The market is off to a very strong start and a lot of market indexes and groups are either testing or breaking through their 200-day moving averages. The most important of all is the S&P 500 which is the standard benchmark for the U.S. stock market. Chart 1 shows the SPX trading over its 200-day line for the first time in a year. Chart 1 also shows the SPX challenging its January intra-day peak at 943. Needless to say, a close over that barrier would be positive. If that occurs, the next upside target for the SPX would be its early November peak at 1007. The only major stock index still below that long-term resistance line is the Dow Industrials. Chart 2 shows, however, that the Dow is very close to challenging the red line. The Dow Transports are having an especially strong day. Chart 3 shows the TRAN rising nearly 5% today and nearing a test of its 200-day average as well. An upside breakout by both of those stock indexes would make Dow Theorists a lot more confident. Most of the day's transportation gains are coming from rails and transports which are most likely benefiting from the continuing surge in commodities.

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COMMODITIES REMAIN STRONG ... Commodities are rallying right along with stocks. Chart 4 shows the DB Commodities Tracking Index (DBC) trading at a seven-month high and nearing a test of its 200-day average (red line). Chart 5 shows the PS Energy ETF (DBE) doing the same. More dramatic action can be seen in the last two charts. Chart 6 shows the PS Industrial Metal ETF (DBB) climbing over its 200-day average. Chart 7 shows the strongest part of the commodity complex which is agriculture. The PS Agricultural ETF (DBA) cleared its 200-day line a couple of weeks ago and is trading at the highest level in eight months. While commodities and stocks are benefiting from economic optimism, former safe havens like the dollar and Treasury bonds remain under pressure.

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