SMALL CAPS AND DOW TRANSPORTS EXCEED THEIR JUNE PEAKS -- DOW EXCEEDS JULY PEAK -- XLI CLEARS 200-DAY LINE -- DEERE BREAKS OUT -- S&P 500 NEARS TEST OF FEBRUARY PEAK
RUSSELL 2000 ISHARES AND DOW TRANSPORTS PASS JUNE HIGH...DOW GAINS...The rally in stocks continues to broaden out. Market groups that had lagged behind the stock recovery are starting to catch up. Small caps and transports are two examples. Chart 1 shows the Russell 2000 iShares (IWM) trading above their June high to achieve a bullish breakout. Chart 2 shows the Dow Transports doing the same. The Dow Industrials, which have been the weakest of the three major U.S. stock indexes, achieved a more modest breakout of its own. Chart 3 shows the Dow trading above its July peak to reach the highest level in eight weeks. That puts the blue chip index in position to test its early June peak. The industrial sector also had a good chart day.
INDUSTRIAL SPDR CLEARS 200-DAY LINE...DEERE BREAKS OUT...This morning's message showed commodity-oriented materials leading the market higher. By the close, however, industrials had taken the lead. Chart 4 shows the Industrial SPDR (XLI) finally clearing its 200-day moving average. It was led higher today by aerospace and airlines -- and commercial vehicles. One stock in that last group caught my eye. Chart 5 shows Deere (DE) breaking through its 2020 highs to achieve a new record.
S&P 500 NEARS TEST OF FEBRUARY HIGH... Seven sectors ended higher today led by industrials, materials, financials, consumer cyclicals, energy, healthcare and technology. The more defensive staples, utilities, and real estate lost some ground. Chart 6 shows the S&P 500 nearing a test of its February peak. That will be an important test for it and the rest of the market. The Nasdaq is the only major index to exceed that previous peak.
