INDIVIDUAL STOCK LEADERS SHOWING RELATIVE STRENGTH INCLUDE KLA TENCOR, FREEPORT MCMORAN, GILEAD SCIENCE, AND ASSURANT -- APPLE IS ALSO STARTING TO SHOW RELATIVE STRENGTH
KLA TENCOR IS SPX LEADER... Relative strength in an individual stock during a downside correction is a positive sign. Today, I'm looking at some individual stock leaders who also happen to be in groups that are also showing relative strength. KLAC Tencor (KLAC) is the day's top percentage gainer in the S&P 500. It's also part of the semiconductor group that's been showing relative strength. The daily bars in Chart 1 show KLAC rising nearly 4% today. It's also testing its 50-day moving average, which is its first resistance barrier.. The KLAC/SPX relative strength ratio (below chart) has reached a two-month high. Its 14-day RSI (top of chart) is moving above 50 for the first time in four months. Its weekly chart is also promising. The weekly bars in Chart 2 show KLAC bouncing off a rising trendline extending back to 2009, and major support along its 2002 peak. Its 14-week RSI (top of chart) is the most oversold since 2008. This chip leader has a lot going for it.
(click to view a live version of this chart)
Chart 1
(click to view a live version of this chart)
Chart 2
SOUTHERN COPPER CLEARS 50-DAY LINE... The second strongest S&P 500 stock is Freeport McMoran (FCX). Since I wrote about the possibility of a bottom in that copper stock yesterday, I'm going to substitute Southern Copper in its place. Chart 3 shows Southern Copper (SCCO) moving above its 50-day average and in the process of testing its 200-day line. Its relative strength ratio (below chart) has reached a two-month high. I suspect that a rally in a very oversold copper market is helping. The weekly bars in Chart 4 shows Southern Copper moving sideways since 2011 when the price of copper peaked (red line). That puts the stock in a good position to benefit from any rebound in the red metal.
(click to view a live version of this chart)
Chart 3
(click to view a live version of this chart)
Chart 4
GILEAD SCIENCE MOVES ABOVE 200-DAY LINE... Gilead Sciences (GILD) is another SPX leader. It's also in a rising biotech group. The daily bars in Chart 5 show GILD reclaiming its 200-day average (red line) after an August plunge. Its relative strength ratio (top of chart) remains in an uptrend. The weekly bars in Chart 6 show Gilead bouncing of a rising support line extending back to 2012 and chart support formed late last year.
(click to view a live version of this chart)
Chart 5
(click to view a live version of this chart)
Chart 6
ASSURANT HITS MONTHLY HIGH... Assurant Inc (AIZ) is one today's SPX leaders as well. The fact that it's an insurance stock may be helping. I wrote yesterday that rising bond yields are good for insurance companies because they can get higher yields on their fixed income portfolio. The daily bars in Chart 7 show Assurant (AIZ) exceeding its late August high to turn its short-term trend higher. It remains above both moving average lines. Its relative strength ratio (top of chart) is at a record high. Another positive is the fact that its August low found support above its late 2014 peak.
(click to view a live version of this chart)
Chart 7
APPLE IS BOUNCING... Apple is the top gainer in the Dow and a recent technology leader. Its relative strength ratio on top of Chart 8 is starting to rise again after falling during July and August. The daily bars show the August panic low bouncing off chart support along last October's low. It still has a way to go to reclaim its moving average lines. The fact that it's starting to show relative strength, however, is a good sign for it and the market. Given the fact that Apple is the largest stock in the market, its direction is very important to market direction. The weekly bars in Chart 9 show Apple bouncing off a rising trendline extending back to mid-2013 and chart support along its 2012 peak.
(click to view a live version of this chart)
Chart 8
(click to view a live version of this chart)
Chart 9
SHORT-TERM LOOK AT S&P 500 ... Yesterday's afternoon downturn prevented the S&P 500 from breaking through its late August intra-day peak at 1993. However, it's bouncing again today. The "hourly" bars in Chart 10 show the short-term battle going on between the August low and the late August peak. I've drawn two converging trendines over and under the sideways pattern. The fact that the lower line is rising, while the upper line is flat, has a slightly positive look to it. The SPX, however, has to close above 1993 to turn its short-term trend upward.
