DOW AND S&P 500 BOUNCE OFF 50-DAY AVERAGES -- NASDAQ REGAINS 200-DAY LINE -- CELGENE AND MERCK LEAD HEALTHCARE SPDR TO HIGHEST LEVEL SINCE AUGUST -- HOMEBUILDERS LEAD CYLICALS HIGHER AS DR HORTON BREAKS OUT -- FACEBOOK HAS STRONG DAY
MARKET HAS UPSIDE REVERSAL DAY ... After trading lower this morning, stocks rallied this afternoon to respectable gains. That upside reversal also helped the Dow Industrials and S&P 500 bounce off their 50-day moving averages as shown in Charts 1 and 2. Chart 3 shows the Nasdaq Composite Index regaining its 50- and 200 - day moving averages. All ten market sectors ended in the black. The three strongest sectors were healthcare, cyclicals, and technology. The weakest three were staples, utilities, and financials. Financials suffered from another record low in Treasury bond yields. A late rebound in those yields, however, may have slowed the advance in staples and utilities.
(click to view a live version of this chart)
Chart 1
(click to view a live version of this chart)
Chart 2
(click to view a live version of this chart)
Chart 3
HEALTHCARE SPDR BREAKS OUT TO TEN MONTH HIGH... Healthcare had the day's strongest chart performance. Chart 4 shows the Health Care SPDR (XLV) closing the day at the highest level since last August. Biotechs led the way. Chart 5 shows Celgene (CELG) jumping more than 4% to close above its 50-day average. Some drug stocks also had a strong day -- like Abbott Labs (+3.5%) and Merck (MRK). Chart 6 shows Merck closing at the highest level in a year.
(click to view a live version of this chart)
Chart 4
(click to view a live version of this chart)
Chart 5
(click to view a live version of this chart)
Chart 6
HOMEBUILDERS LEAD CYLICALS HIGHER -- DR HORTON BREAKS OUT... Chart 7 shows the Consumer Discretionary SPDR (XLY) ending above its 50-day line. Homebuilders were the biggest percentage gainers (followed by home improvement stocks). Chart 8 shows the U.S. Home Construction iShares (ITB) gaining nearly 2% and moving closer to an upside breakout. Chart 9 shows DR Horton (DHI) already trading at new high for the year. Homebuilders are getting a lift from lower mortgage rates which track falling bond yields.
(click to view a live version of this chart)
Chart 7
(click to view a live version of this chart)
Chart 8
(click to view a live version of this chart)
Chart 9
FACEBOOK GIVES BOOST TO TECHNOLOGY SECTOR... Technology stocks were also among the day's market leaders. Internet stocks were the biggest technology gainers. Chart 10 shows Facebook (FB) gaining more than 2% to end the day above its 50-day moving average. It's encouraging to see economically-sensitive stock groups rising faster than defensive stocks for a change. So is the a 3% drop in the CBOE Volatility (VIX) Index to the 15 level.
