NASDAQ GETS BOOST FROM APPLE AND BIOTECHS -- APPLE SURGES 7% HIGHER ON STRONG VOLUME -- TECH SPDR HITS NEW HIGH -- BIOTECH SPDR RISES TO SIX-MONTH HIGH AS AMGEN BUILDS ON BULLISH BREAKOUT -- PHARMACEUTAL ETF ALSO COMPLETES BASE
POWERSHARES QQQ NEARS OLD HIGH... Chart 1 shows the PowerShares QQQ climbing again today and in the process of testing its early December high at 114.75. The QQQ achieved a bullish breakout earlier this month and has shown market leadership since then. That can be seen by the rising QQQ/S&P 500 relative strength ratio (top of chart). The ratio has broken a resistance line extending back to last December. The ratio has also exceeded its early June peak. That carries good news for two groups in particular -- technology and biotechs.
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Chart 1
TECHNOLOGY SPDR LEADS MARKET HIGHER ... Chart 2 shows the Technology Sector SPDR (XLK) hitting a record high again today after achieving a bullish breakout early in the month. Equally impressive is the sharp upturn in the XLK/SPX relative strength ratio (top of chart). That shows new technology leadership which is also good news for the Nasdaq and the market . Much of today's gains are coming from Apple which is the biggest stock in the XLK and the market.
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Chart 2
APPLE JUMPS 7% TO CLEAR 200-DAY AVERAGE... Chart 3 shows Apple (AAPL) gapping 7% higher today in very heavy trading on an earnings report that was better than expected. The stock also moved back above its red 200-day moving average. It still has a ways to go, however, to reverse its current downtrend. For one thing, it needs to clear the resistance line drawn over its November/April high. And eventually its 50-day line will have to cross back above the 200-day. But today was a good start. Its weekly chart is also encouraging. The weekly bars in Chart 4 show Apple bouncing from chart support along its mid-2012 peak. The horizontal line turned from red to green in mid-2014 when the 2012 peak was exceeded. That reflects the tendency for an old resistance peak to become a new support level. In addition, the 14-week RSI line above Chart 4 has crossed above its 50-line, while weekly MACD lines (below chart) are positive. Those are encouraging signs. A much more encouraging would be for Apple to cross above the falling red trendline extending back to spring 2015. Because of its size, a strong Apple stock would be a big positive for the stock market.
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Chart 3
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Chart 4
S&P BIOTECH SPDR CLEARS 200-DAY LINE... The Nasdaq is also benefiting from an upturn in biotech stocks. In fact, four of today's biggest percentage gainers in the QQQ belong to the biotech group (behind Apple). Chart 5 shows the S&P 500 Biotech SPDR (XBI) rising to a six-month high and clearing its 200-day average for the first time since last September. Its relative strength ratio (top of chart) appears to be turning up as well. The weekly bars in Chart 6 shows that the XBI rose above a major down trendline during May and subsequently bounced off it in June. The 14-week RSI line (top of Chart 6) has risen above 50; and the weekly MACD lines (below chart) are positive. Those are also encouraging for the biotech group. That's also good news for the healthcare sector.
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Chart 5
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Chart 6
AMGEN BUILDS ON BULLISH BREAKOUT... My weekend message showed Amgen achieving a bullish breakout earlier this month, and suggested that hinted at better times ahead for the biotech group. That's based on Amgen's size and its role as a biotech bellwether. Chart 7 shows Amgen (AMGN) building on that bullish breakout again today. Its relative strength ratio (top of chart) has broken out to a new six month high. Other biotech leaders today include Illumina (ILMN), Regeneron Pharmaceuticals (RGEN), and Celgene (CELG).
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Chart 7
PHARMACEUTIAL ETF ALSO TURNS UP... The healthcare sector also gained more ground today. Biotechs had a lot to do with that. But do did pharmaceutical stocks. Chart 8 shows the VanEck Vectors Pharmaceutical (PPH) trading at the highest level in six months after clearing its April high. The pharma ETF has also cleared its 200-day moving average. Two of today's standout performers were Eli Lilly (Chart 9) and Astrazeneca (Chart 10). The Healthcare SPDR (XLV) hit another eleven-month high today and is approaching a test of its August high.
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Chart 8
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Chart 9
