ENERGY AND FINANCIALS CONTINUE TO LEAD -- S&P 500 REGAINS ITS 100-DAY AVERAGE

ENERGY ETFS ACHIEVE BULLISH BREAKOUTS... Rising energy prices continue to fuel a rally in energy shares which are the day's strongest sector.   Crude oil and natural gas are trading at the highest level in several years and show no signs of slowing down.  That's contributing to upside breakouts in a couple of energy ETFs.  Chart 1 shows the Energy Sector SPDR (XLE) rising above its June high to reach the highest level in two years.   Chart 2 shows the S&P Oil & Gas Exploration & Production SPDR (XOP) doing the same.   The inflationary impact of rising energy prices is also helping push bond yields higher which is making financial stocks another market leader.

FINANCIAL SECTOR IS SETTING A NEW RECORD...Financials are today's second strongest sector thanks largely to rising bond yields.    Chart 3 shows the Financial Sector SPDR (XLF) in the process of setting a new record high.   Stronger bank stocks are one of the main reasons why.   Chart 4 shows the S&P Bank SPDR (KBE) nearing a record as well.   Bank stocks are one of the main beneficiaries of rising bond yields and a steeper yield curve.   And that's partially the result of rising energy inflation.   And helps explain why both sectors are market leaders.

S&P 500 REGAINS ITS 100-DAY AVERAGE... Wednesday's message showed the S&P trying to. climb back over its 100-day moving average.   Chart 5 shows the SPX gapping above its green line on Thursday.   That's an encouraging sign.   That leaves it between potential resistance at its blue 50-day line and potential support at its green 100-day line.