AIRLINES LEAD TRANSPORTS AND INDUSTRIAL SPDR HIGHER -- UAL IS AIRLINE LEADER -- ALASKA AIR, SOUTHWEST, AND DELTA HAVE A STRONG DAY -- INDUSTRIAL SPDR ALSO TURNS UP -- KANSAS CITY SOUTHERN AND L3 TECHNOLGIES HELP LEAD XLI HIGHER
DOW TRANSPORTS CONTINUE TO GAIN GROUND ... The Dow Transports continue to gain altitude. Chart 1 shows the Dow Transports trading at the highest level in a month and nearing a challenge of its June high. Yesterday's message showed the TRAN being driven higher by United Parcel Service (UPS) as well as a number of rail and trucking stocks. Today's leadership is coming from airlines. Chart 2 shows the Dow Jones Airlines Index climbing 5% today. The index has already broken a falling trendline drawn over its January/March highs. To turn its trend higher, however, it still needs to clear its May high and 200-day moving average. Yesterday's message pointed out that airlines have been the weakest part of the transportation sector all year. The strongest airline performer has been United Continental Holdings (UAL). Chart 3 shows the airline leader challenging its high formed last summer and on the verge of a new record. UAL is an outlier in the airline group. The others are just starting to turn up.
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Chart 1
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Chart 2
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Chart 3
ALASKA AIR, SOUTHWEST, AND DELTA HAVE STRONG DAYS ... The next three charts show the airlines with the biggest percentage gains today. Chart 4 shows Alaska Air (ALK) surging more than 7% and bouncing off its spring lows. Chart 5 shows Southwest Airlines (LUV) reaching a three-month high and on the verge of challenging its 200-day average. Chart 6 shows Delta Airlines (DAL) having already cleared its 200-day line. It's too soon to say if today's impressive rally is the start of a major upturn in the airline group. But it's certainly adding to the upturn in the transportation group. Airlines are also boosting the industrial sector.
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Chart 4
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Chart 5
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Chart 6
INDUSTRIAL SPDR TURNS UP... For the first in at least two months, industrial stocks are showing some market leadership. Chart 7 shows the Industrial Sector SPDR (XLI) rallying to the highest level in more a month and nearing a challenge of its May/June peaks. Its relative strength ratio (upper box) has just started to turn higher. Despite its name, the XLI includes transportation stocks. Three of today's biggest gainers in the XLI are the three airline stocks shown above. Another XLI leader today is a rail stock. Chart 8 shows Kansas City Southern (KSU) breaking out to a new 52-week high. Not all of the XLI leaders are transportation stocks. Another leader is a defense stock. Chart 9 shows L3 Technologies (LLL) surging to a three-month high. With the industrial sector on the rise, it seems only fitting that the Dow Industrials are the day's strongest market average.
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Chart 7
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Chart 8
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Chart 9
DOW INDUSTRIALS REACH FIVE-MONTH HIGH ... For a change, the Dow Industrials are leading the market today. Chart 10 shows the Dow rising above its June peak to reach the highest level since February. Its relative strength ratio (upper box) shows it starting to gain ground on the S&P 500. 20 of its 30 stocks are in the black today with the biggest gains in Travelers, Disney, 3M, Caterpillar, and Walgreens. Boeing, its highest priced stock, is also having a strong day. The Dow has been lagging behind the rest of the market and has just joined the general uptrend. It's possible that today's setback in technology stocks is causing some rotation into cheaper parts of the market that appear undervalued. That would certainly include the industrials. It's also a good sign to see the Dow Industrials and Transports rising together. That should please followers of Dow Theory.
