REBOUND IN BOEING PUTS THE DOW IN THE LEAD FOR THE DAY -- THE DOW CLEARS INITIAL RESISTANCE BARRIER -- ENERGY AND MATERIAL SPDRS REGAIN 200-DAY AVERAGES -- FREEPORT MCMORAN AND MARATHON OIL HAVE A STRONG DAY -- S&P 500 NEARS TEST OF OVERHEAD RESISTANCE
BOEING BOUNCES OFF 100-DAY AVERAGE ... The Dow Industrials led today's follow-through rally in stocks. Today's bounce in Boeing is a big reason why. The daily bars in Chart 1 show the aerospace giant gaining 2.74% today after bouncing off its 100-day moving average (green line). That made it the Dow's second biggest percentage gainer behind DowDupont (2.75%). The stock is also bouncing off chart support along its early February low and has risen to the highest level in two weeks. Its next hurdle to overcome is its 50-day moving average (blue arrow). Odds of that happening look good. Its MACD histogram bars (lower box) turned positive today for the first time since late February. Boeing is also the most expensive stock in the Dow ($335) which gives it the greatest clout (since the Dow is a price-weighted index). That made Boeing today's biggest contributor to the Dow rally. Other Dow leaders include Chevron (2.4%), Caterpillar (2%), and Nike (1.7%). DowDupont and Chevron are part of strong energy and materials sectors. Caterpillar is also one of the Dow's biggest stocks. The Dow itself also had a strong chart day.
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Chart 1
DOW CLEARS INITIAL RESISTANCE BARRIER... Yesterday's message showed the first overhead resistance barrier for the Dow at 24,400 which was the intra-day high reached early last week. Chart 2 shows the Dow clearing that hurdle today. That strengthens the view that a bottom has been seen. Its next hurdle is the falling trendline extending back to late January and its 50-day average (blue arrow). There again, odds of that happening look good. Its MACD histogram bars (below chart) turned positive for the first time in nearly a month. And that's after the histogram bars formed a higher bottom in late March while the Dow was retesting its February low (rising trendline). That "positive divergence" increased the odds for a successful test. That initial upside breakout is more easily seen on its point & figure chart in Chart 3. That p&f chart shows alternating columns of Xs and Os with the X columns representing rising prices. The green Xs show prices exceeding two prior X columns which triggered a p&f buy signal.
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Chart 2
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Chart 3
ENERGY AND MATERIALS HAVE A STRONG DAY ... Shares tied to economically-sensitive commodities were the day's two strongest sectors. Chart 4 shows the Energy Sector SPDR (XLE) climbing back over its 200-day average today. One of its strongest charts is Marathon Oil (MRO) shown in Chart 5. Chart 6 shows the Materials SPDR (XLB) also regaining its 200-day average. It's being led higher by shares tied to aluminum, copper, and steel. Chart 7 shows Freeport McMoran (FCX) gaining 4% after bouncing off its February low. FCX is benefiting from a rebound in the price of copper. Crude oil and industrial metals have corrected with stocks over the past couple of months. They're benefiting from this week's global equity rebound.
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Chart 4
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Chart 5
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Chart 6
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Chart 7
S&P 500 NEARS TEST OF OVERHEAD RESISTANCE... Chart 8 shows the S&P 500 nearing a test of its first resistance level at 2674. Its daily MACD lines (below chart) appear to be on the verge of turning positive. So are its histogram bars. The fact that the SPX is being led higher by economically-sensitive groups (while more defensive groups are lagging behind) is a positive sign. My Monday message suggested that how stocks ended the week (on Friday) would be more important than how they started in (on Monday). Barring some negative surprise, technical odds favor a positive outcome. A strong close tomorrow after a weak opening this past Monday would complete an upside weekly reversal at major moving average lines. That would make for a good chart week.
