DRUGS BOUNCE SHARPLY... Drug stocks led an impressive bounce in the healthcare sector. Chart 1 shows the AMEX Pharmaceutical Index jumping to a two-month high. The DRG is also back over its key moving average lines. The relative strength line under the chart has been dropping for the last six... READ MORE
S&P 500 RETRACES 38% OF BEAR TREND... One of the ways we arrive at upside targets is to identify percentage retracement levels. The most popular percentage retracement of a previous trend is 50%. Professional technicians also place importance on Fibonacci retracements of 38% and 62%. It's... READ MORE
CRUDE JUMPS $1.55... Energy prices spiked higher today. Heating oil gained 4.84 points to lead the advance. Crude oil futures prices jumped $l.55 to close back over $30. That doesn't really change the overall direction of oil, which has been trading sideways for months. To... READ MORE
SOX LEADING STRONG TECHNOLOGY SECTOR... The Semiconductor (SOX) Index is the day's strongest group and is making technology the day's leading sector. Four of the top five percentage tech gainers are in the chip group -- Altera, Applied Materials, National Semiconductor, and Xilinx. AMAT, NSM, and... READ MORE
STRONG ECONOMIC REPORTS BOOST STOCKS... All the major stock averages have hit new highs for the year, thereby keeping their uptrends in intact. A couple of stronger-than-expected economic reports had a predictable effect on the various markets. Stocks and the dollar were strong, while bonds and commodities were weak. Leadership... READ MORE
MATERIALS LEAD OCTOBER'S GAINS... Anyone whose been reading our market messages over the past month shouldn't be surprised to find out that Basic Materials were the strongest market sector for the month of October. Materials gained 9.7% for the month followed by a 9.1%... READ MORE
BUYING INDUSTRIAL METALS... A big reason why commodity markets have been rallying so much this year is the result of buying by China. Investors Business Daily's commodity page this morning carried the headline "Soybeans Soar on Chinese Buying". Soybeans are trading at the highest level in... READ MORE
MATERIALS SELECT SECTOR SPDR HITS NEW HIGH... Earlier today I talked about how rising industrial metal prices (and commodity prices in general) were giving a big boost to basic material stocks and were keeping them in a market leadership role. That trend was evident again today as the Materials Select... READ MORE
FED STILL SEES RISK OF DEFLATION... The bond and stock markets seemed to like the Fed's statement today. It offered a balanced view of things without leaning too far in either direction. It repeated the theme that deflation remains a bigger threat than inflation. Bond traders liked that.... READ MORE
STILL ON NASDAQ ALERT... Last Thursday, I talked about how the Nasdaq was beginning to look toppy -- owing primarily to the size of its yearlong advance, its proximity to major resistance near 2000, and the fact that its weekly indicators were overbought. I also talked about keeping an eye... READ MORE
NIKKEI LOSES 5%... The Japanese stock market had its biggest percentage loss in two years. Chart 1 shows that the Nikkie 225 fell 554 points last night to break its 50-day moving average by the biggest margin in six months. The Hang Seng Index lost 4%. That got the day... READ MORE
AMAZON FORMS POSSIBLE ISLAND TOP... Big losses in Amazon.com and Merck are leading a market correction in morning trading. AMZN has gapped down almost four points in active trading. Combined with an upside gap formed two weeks ago, a potential "island reversal" has formed on the daily... READ MORE
HONG KONG MARKET HITS NEW TWO-YEAR HIGH... Over the first three quarters of this year, Asia has been the strongest region of the world. Within Asia, China has been the main powerhouse. One sign of that has been the relative strength in the Hong Kong market. Chart 1 shows the... READ MORE
THE NEW BOOK IS DONE... I spent this morning at my publisher in New York getting a final look at the pages for my new book on intermarket analysis. I'm happy to say that the book is totally done and should be available by the start of the... READ MORE
HONEYWELL IS DOW'S STRONGEST STOCK... Honeywell is the Dow's top percentage gainer today. Chart 1 shows the stock moving up to challenge its September high near 30. A close above that chart barrier would register a new 52-week high. The relative strength line along the bottom... READ MORE
T-NOTE YIELDS OVER 50-DAY AVERAGE... The yields on T-bonds and notes are continuing to rise. A couple of weeks ago the 10-year T-note yield was testing its 200-day moving average. It bounced off that line and has now risen back over its 50-day average. When yields are rising, prices of... READ MORE
MARKET A LITTLE OVERBOUGHT... Today's pullback isn't too surprising giving the fact that several of the major market averages are somewhat overbought. Charts 1 and 2 show essentially the same picture on two of today's more actively-traded indexes. The Nasdaq 100 Shares touched their... READ MORE
BANK INDEX HITTING 52-WEEK HIGH... Strong action in banking stocks is making the financial sector the day's leading group. Chart 1 shows the PHLX Bank Index moving to a new 52-week high today. Even more impressive is the ability of the BKX to rise above the highs formed... READ MORE
CRUDE OIL REACHES $32... A combination of low supplies this week, and the onset of colder weather, has given a strong boost to the entire energy complex. Nearby crude oil plrices jumped 96 cents today to close just shy of $32. Chart 1 shows that crude oil prices are approaching... READ MORE
NASDAQ HITS NEW HIGH... Jobless claims dropped much more than expected; the drop was the biggest in eight months. That's reminiscent of last Friday's strong jobs report. And the market's reactions are the same. Stocks are higher, bonds are lower; in addition, a bouncing... READ MORE
RUSSELL 2000 REACHES NEW HIGH... Our earlier update showed the small-cap Russell 2000 moving up to a new recovery high this morning. I take that as a positive sign for the market. That's because leadership by small cap stocks is the historical norm when an economy is recovering... READ MORE
LEADING A RECOVERY... Earlier today, I pointed out that small caps and technology stocks were leading an upside breakout in the stock market. That's a good sign, because leadership by those two groups is usually seen in the early stages of an economic recovery. I've also... READ MORE
ALCOA GAINS ON STRONG EARNINGS... A strong earnings report last night boosted Alcoa today and made it day's strongest Dow stock. Chart 1 shows the big aluminum stock climbing on rising volume today. The stock isn't too far from a new 52-week high. The rising relative... READ MORE
DOLLAR FALLS BACK TO YEARLY LOW... A strong jobs report last Friday produced a bounce in the Dollar Index off its June low. It fell heavily today, however, and is within striking distance of this year's low again. Chart 1 shows that the rally in the Dollar Index... READ MORE
EMPLOYMENT NUMBERS SURPRISINGLY STRONG... Today's employment report was much stronger than expected. It showed job growth for the first time in eight months. And, the unemployment figure was unchanged. The immediate market reactions are predictable. Stocks are opening sharply higher. Breadth figures are extremely strong. The S&... READ MORE
GOLD PLUNGES $15... Our morning comment talked about how the strong stock market bounce and a firming dollar was causing some profit-taking in gold shares. That profit-taking has gotten much heavier owing to a $15 drop in the price of gold (Chart 3). Gold is trading below initial chart support... READ MORE
NASDAQ LEADS MARKET RALLY... It seems to always come back to the Nasdaq market. That's because the Nasdaq usually leads the market in both directions. That's shown by the relative strength line plotted along the bottom of the chart. That line is a ratio of the... READ MORE
REIT INDEX HITS NEW HIGH... The Dow Jones REIT Index just recently rose above its previous high reached in the spring of 2002. The $DJR bottomed last October along with rest of the market and really started to gain ground during March as the rest of the market turned higher.... READ MORE
HOMEBUILDERS JUMP ON GOOD VOLUME... Our earlier update today talked about falling bond yields giving a boost to homebuilding stocks and showed KBH turning up. Charts 1 and 2 show two other homebuilders that had very good days. Centex and PHM both broke out of trading ranges on heavy volume.... READ MORE
SUN LEADS NASDAQ LOWER... Sun Microsystems is the most actively-traded Nasdaq stock this morning. And it's price has plunged. Chart 1 shows the stock gapping down to the lowest level in five months. It's also fallen beneath both moving average lines. The stock is now threatening... READ MORE
QQQS SLIP UNDER 50-DAY LINE ON VOLUME... Nasdaq 100 Shares (QQQ) led the market lower again today, reflecting continuing weakness in the technology sector. Chart 1 shows the QQQ closing beneath its 50-day average for the first time in seven weeks. Volume picked up again today as prices fell. Notice... READ MORE
GOLD BACKS OFF FROM FEBRUARY HIGH... On Thursday morning, gold broke briefly through its February high at $390 to hit the highest level in seven years. Unfortunately, it couldn't hold the gain. By day's end, gold had gone from a $5.00 advance to a $2.... READ MORE
OIL BOUNCE HELPS ENERGY STOCKS... OPEC announced a surprise 3.5% cut in production. That's boosting oil prices 90 cents in morning trading and is causing a bounce in oil shares. The energy sector is up 1% and is the only sector in positive territory today. The Oil... READ MORE
CRUDE JUMPS 1.3% ON SURPRISE OPEC CUT... OPEC surprised everyone today by announcing a 3.5% production cut to take effect on November 1. That set a positive tone for energy stocks, but contributed to a down day in the rest of the stock market. Combined with the plunge... READ MORE
DOLLAR PLUNGES TO 3-YEAR LOW AGAINST YEN... As we discussed last week, the weekend G7 meeting called for flexible exchange rates and less intervention by central bankers to keep their currencies from rising. The most dramatic result is being seen in the Japanese yen, which has jumped to the highest... READ MORE
YEN HITS THREE-YEAR HIGH AGAINST THE DOLLAR... Market forces usually win out over market intervention in currency markets. I wrote that statement back on August 29 in a bullish forecast for the Japanese yen. [If you haven't already done so, please read my August 29 Market Message entitled... READ MORE
MIRCOSOFT BREAKS THROUGH MAJOR RESISTANCE... Yesterday IBM broke through some formidable resistance. Today it was Microsoft. The stock rose 1.56 on rising volume to make the Nasdaq's most-actives list. The weekly bars in Chart 1 shows MSFT breaking through the high reached during the fourth quarter of... READ MORE
BANKS AND BROKERS ARE STRONG... The Financial sector is up over 1% today and is the day's strongest group. Chart 1 shows the Financials Select Sector SPDR hitting a seven-week high this morning and moving up to challenge the summer highs. Earlier in the week we showed that... READ MORE
TRANSPORTATION LEADERS... Today's strength in transportation stocks is coming from air freight, rails, and truckers. The top transportation gainer today is CNF Transportation. Chart 1 shows that stock soaring to a new six-month high on massive volume. Yellow Corp is getting close to an eleven-month high. Burlington Nortern... READ MORE
MARKET AVERAGES RESUME UPTRENDS... All the major market averages hit new 52-week highs today to keep their uptrends intact. As has been the case throughout most of the rally since March, the Nasdaq 100 is leading the market higher. It did so again today. Chart 1 shows the Nasdaq 100... READ MORE