MARKET INDEXES SCORE BIG GAINS -- EUROPE GAINS EVEN MORE AND BOUNCES OFF CHART SUPPORT -- ENERGY SHARES REBOUND WITHIN MAJOR DOWNTREND -- HOMEBUILDER ETF RESUMES UPTREND
STOCK INDEXES SCORE BIG GAINS... Global stocks are experiencing a nice bounce today with major U.S. stock indexes experiencing gains of nearly 2%. Chart 1 shows the Dow Industrials climbing well above its 50-day average after holding above chart support at its mid-December low. Chart 2 shows a similar rising pattern for the S&P 500. Chart 3 shows the Nasdaq Composite scoring the biggest percentage gain of the three. The Nasdaq came the closest to testing its mid-December low at 1972. Today's strong rebound puts it safely above that support level and its 50-day average. All nine market sectors are in the green, with the biggest gains in materials, energy, and technology stocks. A 4% gain in Apple is leading the Nasdaq higher, along with 3% jump in semiconductors. U.S. stocks are getting lift from foreign stocks, especially in Europe.
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Chart 1
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Chart 2
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Chart 3
EUROPEAN STOCKS GAIN EVEN MORE... I suggested yesterday that the U.S. market needed some help from Europe to continue its uptrend. It's getting that help today. Chart 4 shows the Dow Jones Europe Index gaining 2.3% today More importantly, today's rebound is coming right near chart support at its October low. The chart has a way to go to turn its trend back up again. At the very least, it needs to clear its 50-day average and its fourth quarter highs. But today's rebound is a good start. Europe's biggest markets saw even bigger percentage gains -- France (3.5%), Germany (3.3%), and Britain (2.3%). It's much easier for U.S. stocks to rise when foreign stock are rising as well. Stocks also rose in other regions of the world, including developed and emerging markets.
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Chart 4
ENERGY ETFS TRY TO STABILIZE... Traders took some comfort in a modest bounce in crude oil today, and did some nibbling in energy shares. Chart 5 shows the Energy SPDR (XLE) rebounding 2% today which kept it above its December low. To signal real improvement, however, the XLE needs to clear its late December peak at 81.00 and its 50-day average. That's the least it would have to do to signal any chance of a bottom in energy.
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Chart 5
HOMEBUILDERS RESUME UPTREND... I recently showed the U.S. Home Construction iShares (ITB) nearing a test of 2014 highs. Chart 6 shows the ITB trading above its spring 2014 high to achieve a bullish breakout. That puts the homebuilding index at the highest level in eight years. Its relative strength line (above chart) has also turned up. The two homebuilders leading the breakout are DR Horton (DHI) and Pultegroup (PHM). Both are trading at 52-week highs.
