CSX AND RAILS LEAD TRANSPORTS HIGHER -- DOW ENDS BACK OVER 50-DAY AVERAGE -- NASDAQ 100 NEARS TEST OF HIGH AND LEADS MARKET HIGHER -- BROADCOM LEADS TECHNOLOGY AND SEMICONDUCTOR ETFS HIGHER -- S&P 500 IS AGAIN TESTING TOP OF SYMMETRICAL TRIANGLE
DOW TRANSPORTS HIT NEW MONTHLY HIGH... The chart picture for the Dow Transports continues to improve. I recently showed the transports finding support at their 200-day moving average and chart support along first quarter lows. Chart 1 shows the TRAN rising today to the highest level in a month. It's also nearing a test of its 50-day moving average (blue line). The ability of the transports to rally off chart support removes one of threats to the market rally. On Monday, Arthur Hill showed that the rails have been the weakest part of the group. Today, they were the strongest. Chart 2 shows CSX surging more than 2% to the highest level in two months and exceeding a resistance line drawn over its November/February highs. Upside volume has been strong. The top three transport percentage gainers were CSX, Norfolk Southern, and Union Pacific.
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Chart 1
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Chart 2
DOW INDUSTRIALS GAINS MORE THAN 100 POINTS... Chart 3 shows the Dow Industrials gaining 88 points (0.49%) today. The blue chip index is once again approaching the upper end of its recent consolidation pattern. The first barrier it needs to overcome is last week's intra-day high at 18169. The Dow's chart still has a bullish look to it. Four of today's biggest percentage gainers were Visa (4%), McDonalds (3%), Coca Cola (1.3%) and Apple (1.3%).
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Chart 3
NASDAQ 100 NEARS FIRST QUARTER HIGH ... Chart 4 shows the PowerShares Nasdaq 100 Trust nearing a test of its first quarter highs. Its relative strength line (top of chart) shows it leading the S&P 500 highers. That's a good sign. A new closing high by the QQQ would be a positive sign for the rest of the market. Technology was the day's strongest sector. Chart 5 shows the Technology SPDR (XLK) reaching the highest level in a month. The day's top technology gainer was Broadcom (5%). That stock also led the semiconductor group higher. Chart 6 shows the Market Vectors Semiconductor ETF (SMH) rising above a falling trendline.
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Chart 4
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Chart 5
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Chart 6
S&P 500 TESTS TOP OF TRIANGLE ... This time last week, the S&P 500 was testing the upper resistance line in a symmetrical triangle (marked by two converging trendlines). As I noted last week, that's normally a bullish pattern. Friday's downturn prevented an upside breakout. We're right back up against that resistance line again. A decisive close over last week's intra-day high at 2111 would be a bullish development. Note: Last Friday's selloff was caused largely by a big selloff in Chinese ETFs. They've jumped sharply this week after China reduced bank reserve requirements. Shanghai hit another seven-year high today, while Japan reached the highest level in 15 years. The FTSE All World Index remains at a record high. That also bodes well for the U.S. stock market.
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Chart 7
BANKS INDEX NEARS UPSIDE BREAKOUT... Bank and brokerage stocks helped lead a rally in financial stocks today. Chart 8 shows the KBW Bank SPDR (KBW) closing just shy of a new eight year high. Banks had been market laggards during the second half of last year. Their relative strength line (top of chart), however, bottomed in January and is starting to rise. Bank leadership is usually a positive sign for the economy and the stock market.
