SMALL CAP VALUE ETF LEADS RUSSELL 2000 TO RECORD HIGH -- INDUSTRIAL SPDR HITS NEW RECORD -- SO DO THE DOW TRANSPORTS -- RYDER NEARS UPSIDE BREAKOUT -- BANKS CONTINUE TO RISE -- FINANCIAL SPDR NEARS A NEW RECORD
RUSSELL 2000 ISHARES LEAD SMALL CAPS TO RECORD HIGHS... The S&P Small Cap Index ($SML) and the Russell 2000 Small Cap Index ($RUT) are hitting record highs today. Small cap value stocks are the main driver behind the breakout. Chart 1 shows the Russell 2000 Value iShares (IWN) trading decisively in new high ground. My weekend message explained that the IWN had a 30% weight in financials shares and was benefiting from the recent rotation into financial stocks. It's second biggest sector weighting is industrials (12%) which are also hitting new records.
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Chart 1
INDUSTRIAL SPDR SHOWS NEW LEADERSHIP... Chart 2 shows the Industrial SPDR (XLI) trading in record territory again today. The XLI started surging at the start of September and continues to do so. Its recent popularity is shown by its rising relative line ratio on top of Chart 2. A big reason why is the September surge in transportation stocks. Two of the top percentage gainers in the XLI today are transportation stocks -- J.B. Hunt (JBHT) and Expeditors International (EXPD). Which is only appropriate since transportation stocks are also hitting new highs.
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Chart 2
TRANSPORTATION ISHARES HIT NEW RECORD... Chart 3 shows the Transportation iShares (IYT) breaking out to a new record today. That puts the transports back in sync with the Dow Industrials which are already in record territory. The relative strength ratio on top of Chart 3 shows the transports gaining ground on the industrials over the last month. Today's leaders are marine transportation stocks Matson (MATX) and Kirby (KEX), JBHT and EXPD, and Ryder. The weekly bars in Chart 4 show Ryder Systems (R) challenging in late 2016 high. An upside breakout appears likely. Its relative strength ratio is also rising.
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Chart 3
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Chart 4
BANKS ARE ALSO GAINING... Banks continue to attract interest. Chart 5 shows the S&P Bank SPDR (KBE) rising above a resistance line drawn over its March/ July highs. Banks and other financials are gaining on expectations for higher interest rates. Chart 6 shows the Financial SPDR (XLF) on the verge of a new record high. Its relative strength line is also rising.
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Chart 5
