OVERSOLD DOW BOUNCES OFF 200-DAY AVERAGE -- INDUSTRIALS AND MATERIALS ARE ALSO GAINING -- CRUDE OIL NEARS ANOTHER YEARLY HIGH -- THAT'S MAKING ENERGY THE DAY'S STRONGEST SECTOR
THE DOW IS LEADING TODAY'S RALLY ... After weighing on the rest of the market all month, the Dow is leading today's rebound. And it couldn't come at a better time. Chart 1 shows the Dow Industrials bouncing off chart support near their late-May low and their 200-day moving average. Its 9-day RSI line (bottom box) is bouncing from oversold territory at 30. The Dow is being led higher by Boeing (BA), Caterpillar), Chevron (CVX), ExxonMobil (XOM, and DowDupont (DWDP). A more conciliatory tone from the White House this morning on Chinese investments in the U.S. helped lift industrials and materials which have been weighing on the rest of the market. Another jump in the price of oil is lifting energy shares for the second day in row.
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Chart 1
INDUSTRIALS AND MATERIALS ARE BOUNCING OFF SUPPORT ... Industrials and materials, which have been hit especially hard hit by trade concerns, are helping lead today's rebound. Chart 2 shows the Materials Sector SPDR (XLB) bouncing off a rising trendline drawn under its April/May lows. It's trying to regain its 50- and 200-day moving average lines. The XLB is being led higher by copper, aluminum and chemical stocks. Chart 3 shows the Industrials Sector SPDR (XLI) bouncing off a previous low formed at the start of April (flat line). It's being led higher by General Electric, Boeing, and Caterpillar. In addition, its 9-day RSI line (bottom box) is bouncing from oversold territory below 30. That's a sign that recent negative sentiment may be easing.
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Chart 2
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Chart 3
RISING CRUDE BOOSTS ENERGY SHARES ... Crude oil prices continue to surge. Chart 4 shows the United States Oil Fund (USO) nearing another multi-year high. Energy shares are the day's strongest sector for the second day in a row. Chart 5 shows the Energy Sector SPDR (XLE) rising above its 50-day average (blue line) after bouncing successfully off chart support formed a month ago. The XLE/SPX relative strength ratio (top box) is also climbing again.
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Chart 4
