STRONG CLOSE ON RISING VOLUME IS SIGN OF STOCK STRENGTH -- SMALL CAPS BREAK OUT -- AIRLINES AND RAILS LEAD TRANSPORTS HIGHER -- MARKET VECTORS GOLD MINING ETF NEARS NEW RECORD -- STAPLES AND HEALTHCARE LEAD DIVIDEND ISHARES HIGHER
NYSE COMPOSITE INDEX RESUMES UPTREND ON RISING VOLUME -- SMALL CAPS BREAK OUT... After opening lower this morning, stocks turned in a positive chart day. All of the major stock indexes closed at or near new recovery highs. And they did so on rising volume, which is a healthy combination. Chart 1 shows the NYSE Composite Index closing at a new four-month high after recently bouncing off its 200-day average and chart support along its August high. Chart 2 shows the Nasdaq Composite closing higher on rising volume as well. Last week's late pullback in the COMPQ bounced impressively off chart support along its August high. Another positive chart sign is the ability of the Russell 2000 Small Cap Index (Chart 3) to close over its August high at 672. That confirms the bullish breakout in large caps last week.
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Chart 1
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Chart 2
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Chart 3
TRANSPORTS CLOSES AT FOUR-MONTH HIGH ... The Dow Transports rose 22 points today to register their highest close in four months (Chart 4). That confirms the upside breakout in the Dow Industrials last week. Airlines have been leading the group higher. Chart 4 shows the Airline Index trading well above its summer highs. Rails have broken out as well. Chart 6 shows the Dow Jones US Railroad Index trading near a new 52-week high. Rails are especially economically-sensitive and are benefiting from new demand for commodities which were up again today.
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Chart 4
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Chart 5
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Chart 6
MINING SHARES CLOSE HIGHER ... Gold hit a new record and silver a 30-year high. Mining shares climbed as well. The daily bars in Chart 7 shows the Market Vectors Gold Miners ETF (GDX) recovering from an early loss to close at a new 52-week high. That puts the GDX right up against its early 2008 high at 56.73 (Chart 8). Commodities in general continue to benefit from a weaker dollar, record low interest rates, and strengthening global stocks.
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Chart 7
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Chart 8
DIVIDEND FUND CLOSES HIGHER... Dividend stocks continue to outperform the rest of the market. The red line in Chart 9 shows the DJ Select Dividend Index ETF (DVY) closing at a new four-month high today and nearing a test of its April high. The DVY has been leading the S&P 500 (gray line) throughout the recent rally. Most of the recent strength in the DVY has come from telecom and utilities. Today's dividend leaders were in consumer staples and healthcare. [Please see today's earlier message on why lower bond yields have been pushing money into higher-yielding stocks].
