STOCKS REGAIN THREE-QUARTERS OF FEBRUARY SELLOFF -- QQQ NEARS TEST OF OLD HIGH -- AMERICAN AIRLINES AND UNION PACIFIC LEAD TRANSPORTS HIGHER -- COMMODITIES ARE ALSO RECOVERING
STOCK INDEXES GAIN MORE GROUND -- QQQ NEARS TEST OF OLD HIGH... U.S. stock indexes continue to gain more ground today and have now regained about three-quarters of their recent correction. Charts 1 and 2 show the Dow Industrials and S&P 500 trading at three-week highs after clearing their 20- and 50-day moving averages. The first significant test of potential overhead resistance will most likely come from the Nasdaq 100. Chart 3 show the PowerShares QQQ nearing a challenge of its late-January intra-day peak at 170.95. Since the QQQ has been leading the market higher, that could be an important test. The only thing missing is volume. The volume bars in Chart 3 show that upside volume hasn't been keeping pace with the strong price action. All market sectors are in the green with the exception of utilities. Financials, industrials, and technology are the day's biggest percentage gainers. Industrials are being led higher by a strong transportation group.
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Chart 1
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Chart 2
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Chart 3
TRANSPORTS ARE TESTING 50-DAY AVERAGE... The daily bars in Chart 4 show the Dow Transports gaining 1.7% today, which makes it one of the day's strongest groups. It also appears to be on the verge of clearing its 50-day average. It's being led higher by a couple of airline and trucking stocks. Chart 5 shows American Airlines (AAL) having cleared its 50-day line in decisive fashion. Chart 6 shows Union Pacific (UNP) doing the same. As I've pointed out several times recently, it's always encouraging to see more economically-sensitive stock groups leading the market rally as they've been doing. A pullback in bond yields is helping stocks regain their confidence, while a pullback in the dollar is giving a boost to commodity prices. After dropping with stocks earlier this month, commodities have been rallying together with stocks over the past two weeks.
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Chart 4
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Chart 5
