NASDAQ 100 LEADS MARKET HIGHER ALONG WITH THE TECHNOLOGY SECTOR -- TWITTER AND ALPHABET LEAD INTERNET STOCKS HIGHER -- INTEL AND MICROSOFT NEAR RECORD HIGHS -- THE DOW CLEARS 50-DAY LINE AND DOWN TRENDLINE -- ITS P&F CHART SHOWS AN UPTREND
NASDAQ 100 LEADS MARKET HIGHER ... Stocks are having another good chart day. All major stock indexes are trading well above their 50-day averages. The Nasdaq market is in the lead. Chart 1 shows the PowerShares Nasdaq 100 (QQQ) gapping over its 50-day line today. The rising red line is a ratio of the QQQ divided by the S&P 500. It too is rising after underperforming the SPX during March. Most of that strength is coming from technology which is also the day's strongest sector. Chart 2 shows the Technology Sector SPDR (XLK) trading well above its 50-day average as well. Its red relative strength line is also rising again. Over the past year, outperformance by technology stocks has usually been a good sign for the rest of the market. And that appears to be the case again today. Technology strength is coming mainly from Internet stocks as well as software and semiconductors.
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Chart 1
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Chart 2
TWITTER AND ALPHABET LEAD INTERNET STOCKS HIGHER ... Internet stocks have been a big drag on the technology sector over the past couple of months. Today, however, internet stocks are leading tech stocks higher. Chart 3 shows the Dow Jones US Internet Index surging 3% and climbing back above its 200-day moving average. It now needs to clear its 50-day line to confirm that a bottom is in place. Chart 4 shows Twitter (TWTR) surging 10% to lead that group higher. The stock is clearing its 50-day average today. Chart 5 shows Alphabet (GOOGL) trying to clear its 50-day line as well. Facebook (not shown) is up more than 2% today, but remains below its moving average lines. Software and semiconductor stocks are also strong.
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Chart 3
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Chart 4
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Chart 5
INTEL AND MICROSOFT NEAR NEW RECORDS... Chart 6 shows Intel (INTC) on the verge of a new high. The semiconductor leader recently exceeded its 2000 peak near 51 to reach a new record. Chart 7 shows software giant Microsoft (MSFT) approaching a record high as well. Along with Cisco, the two stocks are among the biggest percentage gainers in the Dow.
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Chart 6
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Chart 7
DOW INDUSTRIALS CLEAR 50-DAY LINE ... Chart 8 shows the Dow Industrials clearing their 50-day average by the widest margin since late February. It's also clearing a down trendline line drawn over its January, February, and March highs. I mentioned yesterday that the falling trendline was being touched for the fourth time since the January peak. In chart work, the third try to break through it is usually the one that works. So far, it appears to be doing that. Its 9-day RSI line (top box) is back over 50; and its daily MACD lines (below chart) have turned positive. The Dow Transports cleared their 50-day line yesterday. It's a good sign when they're both rising together. My April 5 message showed the Dow registering a buy (or uptrend) signal on its point & figure chart. The green boxes in Chart 9 show that p&f uptrend looking even stronger today. A p&f uptrend is signaled when a rising column of Xs exceeds a previous X column. That's happened twice this month. The same is true for the S&P 500.
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Chart 8
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Chart 9
S&P 500 IS ALSO IN P&F UPTREND ... Chart 10 shows the point & figure version of the S&P 500. The p&f chart shows alternating columns of Xs and Os, with the X columns representing rising prices. A p&f uptrend is triggered when the last column of rising X prices exceeds a previous X column. That registers an upside breakout above a previous peak. Chart 10 shows two bullish signals taking place this month. The green boxes show today's rising price action. [The start of calendar months are marked by the purple numerals. The number 4 marks the start of April]. The value of point & figure charts is that they make buy and sell signals a lot more precise and easier to spot. The rising blue trendlines on Charts 9 and 10 show that the major uptrend is still intact. The SPX also cleared its 50-day average today for the first time in a month. P&f charts are best used in conjunction with bar charts.
