NASDAQ 100 LEADS MARKET HIGHER -- SEMICONDUCTOR STOCKS LEAD TECHNOLOGY REBOUND LED BY XILINX AND KLAC -- AMGEN RESUMES UPTREND WHILE WAL-MART TUMBLES -- STOCK INDEXES CLEAR APRIL HIGHS TO STRENGTHEN MARKET'S SHORT-TERM TREND
CHIP STOCKS HELP POWER QQQ ADVANCE ... The technology-dominated Nasdaq continues to help lead the rest of the market out of its recent downside correction. The daily bars in Chart 1 show yesterday's upside gap in the Power Shares QQQ Trust following a downside gap just two days earlier. The downside gap followed by the upside gap formed an "island reversal" pattern which is defined by the green circle. That's a bullish pattern. Today's QQQ move above its April down trendline also signals that downside correction has likely run its course. Yesterday's upside surge in the QQQ was caused primarily by Apple. Today's Nasdaq rally was caused mainly by chip stocks. Chart 2 shows the Market Vectors Semiconductor (SMH) bouncing strongly off of its March low (green line) and a rising trendline drawn under is October, December lows. Two of the biggest gainers in the SMH are Xilinx which rose 7% today, and KLA-Tencor which gained more than 3%. Chart 3 shows KLAC nearing a new 52-week high after bouncing off its 50-day line. The monthly bars in Chart 3 show KLAC also nearing a test of its 2007 peak. That long-term chart pattern looks bullish.
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Chart 1
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Chart 2
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Chart 3
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Chart 4
AMGN BREAKS OUT -- WAL MART TUMBLES... Last Saturday's message showed Amgen consolidating above a recent breakout point near 65. The monthly bars in Chart 5 show Amgen reaching the highest level in five years to resume its new uptrend (green circle). That's also giving a big boost to the biotechnology group. I also showed Wal-Mart trying to establish a new record high. Unfortunately, that didn't happen. The monthly bars in Chart 6 show Wal-Mart trading back below its 2000 high just above 60 (see circles). The daily bars in Chart 7 show WMT tumblng this week on very heavy volume. That happened after a Sunday NY Times article revealing a possible cover up of bribery of Mexican officials. So far, the long-term damage to the stock has been limited. Today's strong rebound puts it back over its February low at 58. It also remains well above its 200-day average. There's no doubt that the stock's short-term trend has suffered damage. It remains to be seen if the stock can maintain its long-term uptrend.
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Chart 5
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Chart 6
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Chart 7
STOCK INDEX TURN UP ... The daily bars in Chart 8 show the Dow Industrials trading back above its mid-April peak at 13131. The 14-day RSI (top of chart) has climbed above 50, while MACD lines (below chart) have turned positive. Chart 9 shows the S&P 500 exceeding its mid-April high today after a successful test of its April low earlier in the week. It's safely above its 50-day average. Chart 10 shows the Russell 2000 Small Cap Index (RUT) also clearing its mid-April high and its 50-day line. The fact that all three indexes bounced off their March lows is another positive sign. Short-term momentum has now shifted to the upside.
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Chart 8
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Chart 9
