MARKET BREADTH CONTINUES TO IMPROVE--AIRLINES LEAD INDUSTRIAL SECTOR HIGHER

MORE BROADENING OUT...Various measure of market breadth continue to improve.   That includes the number of stocks moving back above their moving average lines.   Chart 1 shows the Percent of S&P 500 stocks trading above their 200-day averages rising to the highest level in four months.   As a result, 67% of SPX stocks are now in uptrends.   The % of SPX stocks above their 50-day averages has risen to 71%.   The S&P 500 has also risen to the highest level in more than a year.   And for the third week in a row, the SPX rally is being supported by a growing number of stocks and sectors.   The last two messages focused on consumer cyclical leadership.   Industrials were this week's star performers.

INDUSTRIAL SPDR HITS RECORD HIGH... The weekly bars in Chart 2 show the Industrial Sector SPDR (XLI) breaking out to a new record over the last week.   It was also the week's third best performer right behind consumer cyclicals.  Its moving average lines also remain in bullish alignment.  Airlines led the XLI higher.

DELTA AND UAL LEAD AIRLINES HIGHER... The weekly bars in Chart 3 show the Dow Jones Airlines Index on the verge of an upside breakout after breaking through a major down trendline.   Two of the leading airline stocks have already turned up.   The weekly bars in Chart 4 show Delta Air Lines (DAL) already trading at the highest level in more than a year.  Chart 5 shows United Airlines close to doing the same.   As a result, we can now add industrial stocks, and airlines in particular, to the growing list of stocks that are helping to broaden out the market rally.