STOCKS SOAR AS DOLLAR WEAKENS -- COMMODITY ETF CLEARS 50-DAY LINE -- SO DOES ENERGY ETF AS ENERGY SHARES CLEAR RESISTANCE -- TRANSPORTS, RETAILERS, AND REITS HIT NEW HIGHS -- S&P 500 CLEARS RESISTANCE AND MAY TEST SPRING HIGH
US DOLLAR CLOSES LOWER... After a higher open today, the U.S. Dollar Index (UUP) ended the day in the red as shown in Chart 1. The UUP continues to fluctuate in a bearish consolidation pattern. At the same time, the Euro did just the opposite. Chart 2 shows the Euro opening lower and closing higher. Another European rate hike lent support. More impressive gains were seen in currencies tied to commodities like the Aussie and Canadian Dollars (see Chart 3). Not surprisingly, global stocks and commodity rallied strongly once again. [Please see this morning's message on why the buying of the Australian Dollar and selling of the yen is positive for stocks and commodities as well as the upside breakout in Japanese stocks].
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Chart 1
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Chart 2
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Chart 3
COMMODITY ETF CLEARS 50-DAY LINE -- SO DOES ENERGY... Commodities continue their strong rally today. After bouncing successfully off its 200-day average (red line), the DB Commodities Tracking Index (DBC) cleared its 50-day average (blue line) today as shown in Chart 4. And it did so on rising volume. Chart 5 shows the DB Energy ETF (DBE) clearing its 50-day line as well. That gave energy stocks a big lift. Chart 6 shows the Energy SPDR (XLE) clearing its late May high near 77. The rising relative strength line (below chart) shows energy stocks starting to show upside leadership. The same is true of basic material stocks.
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Chart 4
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Chart 5
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Chart 6
TRANSPORTS, RETAILERS, AND REITS HIT NEW HIGHS... At least three groups hit new highs today. Chart 7 shows the Dow Transports reaching a new record. Truckers joined the rails in new high ground. A strong retail report helped fuel today's stock gains. That helped push the S&P Retail SPDR (XRT) to a new high as well (Chart 8). Both are economically-sensitive and bode well for the U.S. economy. REITs also hit a new high today as shown in Chart 9. That may be part of a search for higher yield in a climate of low interest rates.
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Chart 7
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Chart 8
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Chart 9
S&P 500 CLEARS LATE MAY PEAK... Chart 10 shows the S&P 500 closing well above its late May peak at 1345 and it did so on rising volume. The raises the likelihood of a test of its early May peak at 1370. The RSI line is nearing overbought territory at 70, but hasn't reached it yet. That suggests that the market has more room to rise. On any pullback, initial chart support is now likely ranging from 1345 to 1330. The only losers on the day were Treasury bonds. The green line below Chart 10 shows the long Treasury Bond ETF (TLT) continuing to decline as stocks rise.
