SEMICONDUCTORS LEAD THE NASDAQ AND TECHNOLOGY SECTOR HIGHER TODAY -- CHIP LEADERS INCLUDE APPLIED MATERIALS, KLA-TENCOR, AND LAM RESEARCH -- MOST OTHER SECTORS ARE IN THE RED -- DOW AND S&P 500 ARE STRUGGLING AT MOVING AVERAGE LINES
SEMICONDUCTOR ISHARES HAVE A STRONG DAY... Semiconductor stocks are the strongest part of the market today. Chart 1 shows the PHLX Semiconductor iShares (SOXX) trading more than 2% higher today and moving further above its 50-day moving average. The SOXX has also risen above its 20-day moving average (green line). The SOXX/SPX relative strength ratio (top of chart) has just hit the highest level in three months. That's giving a boost to the technology sector and the Nasdaq market. The top five perentage gainers in the PowerShares QQQ come from that same group. Three of them are shown below.
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Chart 1
APPLIED MATERIALS, KLA-TENCOR, AND LAM RESEARCH ARE CHIP LEADERS ... Three of the top percentage gainers in the QQQ are shown below. Chart 3 shows Applied Materials (AMAT) surging to the highest level in a month and clearing moving average lines. Its relative strength ratio (top of chart) has reached a three-month high. Chart 3 shows KLA-Tencor (KLAC) not far behind. Chart 4 shows Lam Research (LRCX) clearing its 50 and 20-day moving averages. Other chip leaders today include Analog Devices (ADI) and Xilinx (XLNX). They're helping make technology the day's strongest sector. They're also giving a big boost to the Nasdaq 100 (QQQ).
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Chart 2
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Chart 3
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Chart 4
TECHNOLOGY SPDR AND QQQ LEAD MARKET HIGHER ... The daily bars in Chart 5 show the Technology Sector SPDR (XLK) trading above its 20-day average as well. Even more impressive is the XLK/SPX ratio (top of chart) which has hit a new high. The same is true of the PowerShares QQQ shown in Chart 6. The top three gainers in the Dow Industrials are also technology shares -- Intel, Microsoft, and Apple. Most other market sectors are in the red today.
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Chart 5
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Chart 6
DOW AND S&P 500 STRUGGLE WITH MOVING AVERAGE LINES ... Outside of technology, the rest of the market is struggling today. The daily bars in Chart 7 show the Dow Industrials having trouble staying above its (blue) 50-day moving average line after meeting resistance on Friday at its 20-day average (green line). Its 14-day RSI line (top of chart) is also meeting resistance at the 50 line (blue arrow). Chart 8 shows the S&P 500 in a similar situation (blue circle). Technical odds appear to favor a pullback from current levels which could retrace a part of last week's gains or retest recent lows as part of a potential bottoming process. It's hard to imagine the market suffering too much short-term damage, however, as long as technology stocks continue to rise.
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Chart 7
