FINANCIAL SPDR ACHIEVES BULLISH BREAKOUT -- INDUSTRIAL SPDR MAY BE NEXT -- MATERIALS SPDR REGAINS MOVING AVERAGE LINES -- THE DOW INDUSTRIALS AND TRANSPORTS ARE BREAKING OUT TOGETHER -- THE S&P 500 NEARS TEST OF JANUARY HIGH

FINANCIALS SPDR BREAKS OUT ... Global stocks are having a strong day. Rebounds in foreign developed and emerging markets set the tone for higher trading in the states. All major U.S. indexes are in the black, as are most stock sectors. The strongest sectors are energy, financials, industrials, and materials. The only ones in the red are staples, utilities, and REITS. Financials are having the best chart day. Chart 1 shows the Financial Sector SPDR (XLF) rising above its May high to achieve an upside breakout. A rebound in bond yields may be helping. Industrials may be next. Chart 2 shows the Industrial Sector SPDR (XLI) moving up to challenge its late-July peak. The XLI managed to clear its June high near the end of July before pulling back. It may be getting ready to restore that upside breakout. Materials are also having a strong day. Chart 3 shows the Materials Sector SPDR (XLB) climbing back over its 50- and 200-day moving averages. The XLB is being led higher today by copper and steel stocks. A couple of major stock indexes are achieving bullish breakouts as well.

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Chart 1

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Chart 2

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Chart 3

DOW INDUSTRIALS AND TRANSPORTS BREAKOUT TOGETHER ... The Dow Theory holds that upside breakouts by the Dow Industrials and the Dow Transports are a bullish sign for the market. Chart 4 shows the Dow Industrials rising to the highest level in more than five months today. It actually achieved its bullish breakout last week by exceeding its June high. Chart 5 shows the Dow Transports rising above its June high to achieve a bullish breakout of its own.

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Chart 4

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Chart 5

S&P 500 NEARS TEST OF JANUARY HIGH ... The most important chart of the day may belong to the S&P 500. Chart 6 shows the SPX nearing a test of its January intra-day high at 2872. That's a very important test for it and rest of the market. Back in May, the SPX broke through the upper trendline in a bullish symmetrical triangle (green circle). That bullish breakout set the stage for a retest of its old high formed at the start of the year. And it's nearly there. What the SPX does when it gets there will tell us a something about the staying power of the current uptrend.

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Chart 6

CHARTCON 2018 ... I'll be giving an update on my current market views at Chartcon 2018 on Saturday morning. I hope you can join us. It promises to be a very special weekend.