THE S&P 500 JOINS THE DOW ABOVE ITS 200-DAY AVERAGE -- CONSUMER DISCRETIONARY AND INDUSTRIAL SPDRS HAVE CROSSED THEIR THEIR RED LINES -- THE XLI HAS ALSO CLEARED ITS DECEMBER HIGH -- RAILS ARE BOOSTING THE XLI -- NYSE AD LINES NEAR TEST OF 2018 HIGHS
S&P 500 CROSSES ABOVE ITS 200-DAY AVERAGE... Up to last night, the Dow Industrials were the only major stock index to trade above their 200-day average. The S&P 500 closed marginally above its 200-day line yesterday. Chart 2 shows the SPX extending that gain over its red line today. That leaves their early December highs as the next resistance barrier to be challenged. Both indexes remain somewhat over-extended after their strong 2019 rebound. The upper box in Chart 1 shows the Dow's 9-day RSI line moving into overbought territory over 70 for the second time this month. The second move over 70 is usually the more troublesome and bears close watching for any sign of failure. Daily MACD lines (lower box) remain positive. Chart 2 shows the slower 14-day RSI line for the S&P 500 still trading below its 70 line which hasn't been reached since last August. Chart 3 shows the Nasdaq Composite in the process of testing its red line and its early-December intra-day peak at 74.86. This week's upside crossings of 200-day lines is a positive sign for stocks. It's important, however, that they end the week on top of the those lines. Several sector SPDRs have also crossed over their red lines which include cyclicals and industrials.
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Chart 1
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Chart 2
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Chart 3
INDUSTRIAL SPDR CLEARS DECEMBER HIGH ... Chart 4 shows the Consumer Discretionary Sector SPDR (XLY) trading over its 200-day line and nearing a test of its December high. Chart 5 shows the Industrial Sector SPDR (XLI) already clearing its early-December peak. [The only other sector ETF to do that is Real Estate (XLRE) which is trading at a record high]. The XLI has been drawing strength from rising transportation stocks, and rails in particular. Chart 6 shows the Dow Jones US Railroad Index reaching the highest level since early November. Its biggest gainers include CSX, Norfolk Southern (NSC), and Union Pacific (UNP). Building materials, industrial suppliers and machinery have also been industrial leaders. Other sector SPDRS that are trading above their 200-day lines include staples (XLP), healthcare (XLV), utilities (XLP) and Real Estate (XLRE). That shows that investors aren't abandoning defensive stock sectors while buying into more economically-sensitive groups.
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Chart 4
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Chart 5
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Chart 6
NYSE ADVANCE-DECLINE LINES NEAR 2018 HIGHS ... Two different versions of the NYSE Advance-Decline line are shown below. And both are showing essentially the same picture. Chart 7 shows the more traditional NYSE AD line nearing a test of its late August peak. Chart 8 shows the NYSE Common Stock Only version of the AD line heading in the same direction. Most stock analysts prefer the AD version in Chart 8 because (as its name implies) it's limited to common stocks. Needless to say, the test of the 2018 high will be an important test for both AD lines and the market as a whole. The fact that both AD lines are leading major U.S. stock indexes higher is usually a positive sign for the market. But their test of last year's high will have to be closely watched.
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Chart 7
