UKRAINE CEASEFIRE BOOSTS RUSSIAN STOCKS -- AGGRESSIVE ECB ACTION ALSO BOOSTS EUROZONE STOCKS -- FALLING EURO UNDERMINES STOCK ETFS -- ALL THREE CHINESE INDEXES ARE NOW IN UPTRENDS -- DOW INDUSTRIALS ARE STILL TESTING SUMMER HIGH

RUSSIAN RALLY HELPS EUROPEAN STOCKS... Expectations for a cease-fire in Ukraine gave a big boost to Russian stocks as well as European stocks closely tied to Russia. Chart 1 shows the Market Vectors Russia ETF (RSX) climbing 6% during the week to close just above its 200-day moving average average. A close above its mid-August peak at 25.52 would improve its chart pattern even further. Eastern European stocks also got a boost. Chart 2 shows the Emerging Europe SPDR (GUR) jumping to a two-month high. [The GUR includes Russia, Turkey, Poland, the Czech Republic, and Hungary]. Chart 3 shows Poland iShares (EPOL) also closing above their 200-day line. Polish stocks gained 5% on the week. Eurozone stocks also got a boost from the Russian rally and ECB easing. Eurozone stock ETFs, however, were held back by a plunging Euro.

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Chart 1

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Chart 2

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Chart 3

FALLING EURO UNDERMINES EURO STOCK ETFS... Developed eurozone stocks got a boost from two sources. One was the improved situation in Ukraine. The other was aggressive ECB easing on Thursday to boost the eurozone economy and combat deflaton. Chart 4 shows the German DAX Index climbing nearly 3% during the week to end at a two-month high. The DAX also ended above its 200-day line (as did stocks in France, Italy, Ireland, Spain, and the Netherlands). That wasn't the case with their respective stock ETFs, however. Chart 5 shows Germany iShares (EWG) gaining on the week, but remaining well below their moving average lines. Its smaller gain of 1.6% was primarily due to the plunging euro, which had its biggest one-day drop on Thursday in three years (-1.4% for the week). Foreign stock ETFs are priced in dollars. As a result, they underperform cash indexes when the euro is falling and the dollar rising. American investors need to keep that in mind when investing in Europe, since stock gains can be eroded by a weak local currency. The EWG paints a truer picture of what an American investor is getting from an investment in German stocks.

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Chart 4

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Chart 5

HONG KONG LEADS CHINESE RALLY -- BUT SHANGHAI STOCKS TURNS UP... The jump in Russian stocks gave a boost to emerging markets as well. Emerging Markets iShares (EEM) hit a three-year high. It also got a lot of help from rising Chinese stocks. The black bars on top of Chart 6 show the Hong Kong Hang Seng Index rising to the highest level in six years. The red bars in Chart 6 show China IShares (FXI) reaching a three-year high. [The FXI includes 25 Chinese stocks that are traded in Hong Kong]. For the first time in a while, Chinese stocks traded in Shanghai are also starting to rise. The solid red line in Chart 6 show the Shanghai Stock Index (SSEC) climbing to a new 15-month high. As a result, all three Chinese indexes are rising together. Part of the reason why stocks traded in Shanghai (called A shares) have lagged so far behind those traded in Hong Kong (called H shares) has been restrictions placed on foreign ownership of mainland Chinese stocks. Later this year, however, many Shanghai stocks will be traded in Hong Kong. That should open mainland stocks to more foreign ownership, and may help close the gap between the A and H shares. It should increase global interest in Chinese stocks in general.

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Chart 6

ALL THREE DOW AVERAGES ARE RISING TOGETHER... My Wednesday message showed the Dow Industrials and Transports testing their summer highs. The bars on top of Chart 7 show that the Dow Transports have hit new highs (led by rails and truckers). The Dow Industrials, however, are still testing their July peak. The Industrials need to hit a new high to confirm the upside breakout in the Transports. Odds for an upside breakout appear pretty good however. It's usually a good sign for the industrials when the more economically-sensitive transports are leading it higher. The bars below Chart 8 show the Dow Utilities ending the week at a two-month high. That means that all three Dow Averages are rising together, which is normally a good sign.

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Chart 7

NIKE IS TOP DOW PERFORMER... The top percentage gainer in the Dow this week was Nike. Chart 8 shows Nike (NKE) surging on Friday to a new record high. Walmart (WMT) also had a strong week. The daily bars on top of Chart 8 show WalMart surging 2.6% on Friday to to a new four-month high. There were lots of other Dow stocks hitting new highs.

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Chart 8

MORE DOW LEADERS... Chart 9 shows other recent Dow leaders to include Microsoft, Merck, United Health, and Home Depot. All four are trading at 52-week highs. Chart 10 shows three of the Dow's biggest laggards to be McDonalds, Exxon Mobil, and Boeing. Boeing was the Dow's biggest percentage loser this week. The Dow's energy stocks are being hurt by a weak oil market.

Chart 9

Chart 10