THE DOW ENDS JUST ABOVE ITS 200-DAY AVERAGE -- WHILE THE S&P 500 REGAINS ITS 50-DAY LINE -- THE RUSSELL 2000 AND NASDAQ 100 LEAD MARKET HIGHER -- SEMICONDUCTOR ISHARES BOUNCE OFF THEIR 200-DAY AVERAGE TO LEAD TECH SECTOR HIGHER
MOVING AVERAGE LINES ARE STILL HOLDING... Major stock index continue to find support around moving average lines. Chart 1 shows the Dow Industrials rising 181 points (+0.75%) to close at 24356. That was enough to put it just above its 200-day moving average. Other stock indexes did even better. Chart 2 shows the S&P 500 closing back above its 50-day average after gaining 23.39 points (+0.86%) today. Chart 3 shows the Russell 2000 Small Cap Index gaining an even stronger +1.15% after bouncing off its 50-day line. The day's strongest stock index was the Nasdaq 100 (QQQ) which gained +1.24% on the day. Chart 4 shows the QQQ continuing to find support at its 50-day line. The QQQ was led higher by technology stocks. Technology was the day's strongest sector (1.41%) followed by consumer staples (1.40%) and healthcare (1.05%). Ten of eleven sectors gained ground expect for energy which followed the price of oil lower. Semiconductors led technology stocks higher and are also finding moving average support.
(click to view a live version of this chart)
Chart 1
(click to view a live version of this chart)
Chart 2
(click to view a live version of this chart)
Chart 3
(click to view a live version of this chart)
Chart 4
PHLX SEMICONDUCTOR ISHARES BOUNCE OFF 200-DAY AVERAGE ... Add semiconductors to the list of groups that are finding support at an important moving average line. Chart 5 shows the PHLX Semiconductor iShares (SOXX) gaining +2.67% today to lead the technology sector higher. The SOXX is also finding support at its 200-day moving average. Given the importance of chip stocks to the technology sector, and the rest of the market, it's encouraging to see that major support line holding.
(click to view a live version of this chart)
Chart 5
HEALTHCARE SECTOR NEARS UPSIDE BREAKOUT ... The healthcare sector was one of today's market leaders and its chart reflects that improvement. The daily bars in Chart 6 show the Health Care SPDR (XLV) nearing a test of its June high and a "neckline" drawn over its March/June highs. The XLV/SPX relative strength ratio (lower box) has been rising for two months and today touched the highest level since the start of May. Biotechs helped lead the XLV higher. Just last week the XLV bounced off its 50- and 200-day moving averages. While today's action in the holiday-shortened week was encouraging, tomorrow's action will be even more important since it marks the end of the week. If the market can build on today's gains (and hold on to its moving average lines), stocks will be in a stronger technical condition as they enter the second half of the year.
