THE DOW LEADS NOVEMBER REBOUND -- THE S&P 500 IS BACK ABOVE ITS 200-DAY LINE -- SO ARE THE QQQ AND XLK -- HEALTH CARE PROVIDERS LEAD THE XLV -- SO ARE ABBOTT LABS, JOHNSON & JOHNSON, AND MERCK
THE DOW LEADS STOCK UPTURN ... Major stock indexes are building on their November gains on the day after the midterm elections. The Dow is leading on the upside. Chart 1 shows the Dow Industrials already trading above chart resistance at 25,800 and trying to clear its 50-day average. Chart 2 shows the S&P 500 gapping above its 200-day line which clears an important chart barrier. A more difficult test, however, may come at its previous peak at 2816 and its 50-day average. The Nasdaq Composite (not shown) is nearing a test of its 200-day line. Chart 3, however, shows the Nasdaq 100 (QQQ) already trading above its red line. The QQQ is getting a lift from the Technology SPDR (XLK) which is also trading above its 200-day line (not shown). Those major stock indexes are trying to repair chart damage done during October. A bigger test for most of them will be their ability to clear their 50-day lines and their mid-October peaks. While short-term indicators have turned positive, weekly and monthly charts still have a more bearish look to them. The battle currently underway is between the usual seasonal strength during November, especially after a midterm election, and longer-range technical warnings that the bull market may be in the process of topping.
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Chart 1
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Chart 2
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Chart 3
HEALTHCARE SPDR CLEARS 50-DAY AVERAGE ... While most sectors are in the black today, healthcare is the clear leader. Chart 4 shows the Health Care SPDR (XLV) climbing back over its 50-day average (blue line) after a successful retest of its 200-day average (red line) near the end of October. The XLV/SPX relative strength ratio (top box) may be nearing a new high. The XLV is being led higher today by healthcare providers and pharmaceuticals. Chart 5 shows the Dow Jones US Health Care Providers Index jumping to a new high. It's being led by Anthem (ANTM), DaVita (DVA), and Unitedhealth Group (UNH). Chart 6 shows the Dow Jones US Pharmaceuticals Index climbing back over its 50-day average. It's being led by Abbott Labs (ABT), Johnson & Johnson (JNJ), and Merck (MRK). Merck is trading at a new record, while the other two are getting close.
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Chart 4
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Chart 5
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Chart 6
ABBOTT LABS AND JNJ NEAR NEW HIGHS ... Chart 7 shows Abbott Laboratories (ABT) rising to the highest level in a month and heading for a test of its early October high. Its relative strength ratio (top box) is already at a record high. Chart 8 shows Johnson & Johnson (JNJ) nearing a test of its January peak near 145. A decisive close above that chart barrier would put the drug leader at a new record as well. Its relative strength ratio (top box) has also been rising.
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Chart 7
