CISCO, INTEL, AND MICROSOFT LEAD DOW HIGHER -- TECHNOLOGY SECTOR SHOWS NEW LEADERSHIP -- FINANCIAL SPDR IS TRADING OVER ITS 200-DAY AVERAGE -- CHINA LEADS EMERGING MARKET STOCKS HIGHER -- CHINESE STOCKS ARE NOW DOING BETTER THAN THE U.S.

CISCO, INTEL, AND MICROSOFT ARE DOW LEADERS ... A glance at today's most actives list for the Dow shows three stocks attracting a lot of the buying. Chart 1 shows Cisco (CSCO) surging to an all-time high. Its rising relative strength line (upper box) shows it leading the Dow higher since the start of August. Chart 2 shows Intel (INTC) surging to the highest level since last July. Its relative strength line has been climbing since the end October. Intel is part of the strong resurgence in semiconductor stocks. Chart 3 shows Microsoft (MSFT) nearing a test of its early December peak, after clearing a trendline drawn over its October/December highs. Its relative strength line (upper box) has just starting climbing (see circle), which qualifies it as a new Dow leader. All three stocks are from the technology sector which has emeraged as a new market leader.

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TECHNOLOGY SPDR SHOWS EADERSHIP -- XLF CLEARS 200-DAY LINE... Chart 4 shows the Technology SPDR (XLK) surging to the highest level in more than four months. The XLK has already cleared its 200-day average (red line). It's also showing new market leadership. That can be seen by the rising XLK/SPX ratio in the upper box. Technology is today's second strongest sector. Financials are the strongest. Chart 5 shows the Financial Sector SPDR (XLF) crossing over its 200-day line today. Financials have been market laggards, but are starting to play catch up.

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CHINESE STOCKS LEAD EMERGING MARKETS HIGHER... A delay on raising tariffs on Chinese imports this coming Friday, and increased hopes for a trade deal between China and the U.S., are giving a big boost to Chinese stocks and emerging markets. Chart 6 shows the Deutsche X-trackers CSI 300 China A-Shares ETF (ASHR) surging more than 6% today to the highest level in eight months. The ASHR is composed of stocks traded in mainland China. That buying is behind today's strong rally in emerging market stocks. Chart 7 shows MSCI Emerging Markets iShares (EEM) climbing to a new six-month high. The EEM cleared its 200-day average a month ago. That's helping fuel a rally in other global stock markets with China in the lead.

NEW CHINESE LEADERSHIP: For the first time in a year, Chinese stocks are doing better than other global stocks, including the United States. Chart 8 shows the CSI 300 China A-Shares (ASHR) divided by the S&P 500 since the start of last year. That rising relative strength ratio has now reached the highest level since last June. That's a pretty dramatic reversal of roles.

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