US STOCKS LEAD GLOBAL RALLY -- SMALL CAP INDEXES HIT NEW RECORDS -- MIDCAPS BREAK THROUGH RESISTANCE -- NASDAQ ALSO HITS NEW RECORD -- DOW AND S&P BREAK OUT TO UPSIDE -- RETAILERS LEAD CONSUMER DISCRETIONARY STOCKS HIGHER
SMALL CAPS HIT NEW RECORD HIGHS... Let's start off today where we started yesterday -- with small cap stocks which continue to lead the market higher. Charts 1 and 2 show the S&P 600 and the Russell 2000 Small Cap Indexes hitting new record highs. As shown yesterday, Russell Small Cap Growth (IWO) is hitting a new record, while Russell Small Cap value (IWN) is trading at a two-month high. It's usually better when growth stocks are stronger than value (as is also true with large caps). Small cap leadership is also a good sign for the stock market. Midcaps are also doing well. Chart 3 shows the S&P 400 Mid Cap Index rising above last week's intra-day high at 1537. A number of large cap stock indexes are also achieving upside breakouts.
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Chart 1
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Chart 2
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Chart 3
NASDAQ COMPOSITE HIT NEW HIGH ... It's also a good sign when the Nasdaq is leading the rest of the market higher -- as it's doing today. Chart 4 shows the Nasdaq Composite Index trading above its April intra-day high at 5119. That puts the Nasdaq at a new record high close. Chart 5 shows the PowerShares QQQ Trust ETF (which includes the largest 100 non-financial stocks) trading above last week's high at 110. Other large cap indexes are doing the same. Chart 6 shows the S&P 500 Index exceeding last week's intra-day high at 2115. Chart 7 shows the Dow Industrials very close to an upside breakout of its own. Assuming those upside breakouts hold through the rest of the day, they're all positive signs for the U.S. market.
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Chart 4
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Chart 5
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Chart 6
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Chart 7
RETAILERS LEAD CONSUMER DISCRETIONARY SPDR HIGHER... All ten market sectors are in the black today. The top percentage gainers are healthcare (led by biotechs), consumer discretionary, staples, and utilities. Dividend-paying staples and utilities are being helped by yesterday's dovish Fed statement. I'm more impressed by today's gains in economically-sensitive discretionary stocks which should do better in a rising market. And they are. Chart 8 shows the Consumer Discretionary SPDR (XLY) hitting a new record high. Its relative strength line (top of chart) is also rising. Retail stocks (which are leading indicators of consumer spending) are also having a strong day. Chart 9 shows the S&P Retail SPDR (XRT) hitting a new two-month high. Chart 10 shows the Market Vector Retail ETF (RTH) rising above its 50-day average and a resistance line drawn over its April/May highs. Sector ETFs that are rising above their 50-day averages include materials (XLB), technology (XLK), and staples (XLP). All in all, a very strong day in the U.S. market. Foreign stocks are also bouncing today. That's also encouraging, especially in Europe, which is the most vulnerable to the possibility of a Greek default.
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Chart 8
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Chart 9
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Chart 10
BIOTECHS PUSH HEALTHCARE SPDR TO NEW HIGH... Another sign that investors are willing to assume risk is today's impressive upmove in biotechs. Chart 11 shows Biotech iShares (IBB) jumping to a new record high. That's giving a boost to the Nasdaq market which is doing the same. But it's also helping the healthcare sector. Chart 12 shows the Health Care Sector SPDR (XLV) on the verge of a new high as well. Its relative strength line is close to doing the same.
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Chart 11
