DOW HITS NEW RECORD WHILE TECHNOLOGY LAGS -- SEMIS RUN INTO RESISTANCE -- DIP IN 10-YEAR YIELD MAY BE BOOSTING STOCKS

TECH NEARS OVERHEAD RESISTANCE... While the Dow and S&P 500 are trading higher today, with the Dow in record territory, the tech-dominated Nasdaq market continues to lag behind the rest of the market.  Chart 1 shows the Technology SPDR (XLK) nearing a test of its 50-day moving average (blue arrow).  The XLK is the day's weakest sector which shows it lagging behind the rest of the market on a generally strong day.  Relative strength in the other ten sectors reflects continuation of the recent rotation into more cyclical value stocks that are gaining ground today.   Semiconductors are the weakest part of the XLK today and are running into resistance of their own.

Chart 2 shows the VanEck Vectors Semiconductor ETF (SMH) meeting resistance along the bottom of its February trading range near 234.   That's also weighing on the tech sector and the Nasdaq market.   Sectors leading the market higher are energy, materials, financials, and industrials.   The 10-Year Treasury yield which has been rising sharply is dipping today which may also be supporting stock prices.

10-YEAR BOND YIELD DIPS AFTER AUCTION... Bond yields are dipping today following an auction of 10-Year Treasuries.   Chart 3 shows the TNX dropping 3 basis points to 1.52%.   The pullback in bond yields is taking place from an overbought condition as measured by the 14-day RSI line in the upper box.   The main trend of bond yields, however, is still higher and any pullback from recent highs is most likely a consolidation of those strong gains.  Which suggests that any pullback in yields is probably temporary.   A benign inflation report this morning may have contributed to today's pullback in bond yields and rally in stocks.  Technology stocks are especially vulnerable to rising bond yields.

DOW HITS NEW RECORD... SO DO MATERIALS...Chart 4 shows the Dow Industrials hitting a new record today.   It's the strongest of the three major stock indexes.  Chart 5 shows the S&P 500 moving closer to its old high as well.  Small caps are also having a strong day.   Ten of eleven sectors are in the black with materials one of the sectors in the lead.  Chart 6 shows the Materials Sector SPDR (XLB) rising into record territory today.  It's being lead higher by aluminum and steel stocks as part of the reflation trade benefitting from higher commodity prices.