Why This Rally May Have Legs
The Dow Jones Industrial Average broke above
10,000 on strong volume. Armed with a positive earnings report and not so dreary news about the tech industry, Cisco Systems
(
CSCO |
Quote |
Chart |
News |
PowerRating) CEO John
Chambers set the tone for today’s big rally in the markets. The Dow Jones
Industrial Average
(
$INDU |
Quote |
Chart |
News |
PowerRating) took off from where it closed yesterday and
never looked back. The Dow rallied as high as 10138, up over 302 points. The
market internals are strong with NYSE advancers outpacing decliners 1801 to
1261. Two sectors that are helping propel the Dow up are:
The S&P Banks Index
(
$BIX.X |
Quote |
Chart |
News |
PowerRating). The majority of the components in the index are
positive. Some of the stronger performers are Bank Of America
(
BAC |
Quote |
Chart |
News |
PowerRating),
Bank Of New York
(
BK |
Quote |
Chart |
News |
PowerRating), Comerica
(
CMA |
Quote |
Chart |
News |
PowerRating), FleetBoston Financial
(
FBF |
Quote |
Chart |
News |
PowerRating)
and JP Morgan
(
JPM |
Quote |
Chart |
News |
PowerRating).- The
Amex Securities/Broker Dealer Index
(
$XBD |
Quote |
Chart |
News |
PowerRating). All of the sector components are trading
positive today.
Some of the strongest stocks are Goldman Sachs
(
GS |
Quote |
Chart |
News |
PowerRating), Morgan Stanley
(
MWD |
Quote |
Chart |
News |
PowerRating),
Bear Stearns
(
BSC |
Quote |
Chart |
News |
PowerRating), Jeffries Group
(
JEF |
Quote |
Chart |
News |
PowerRating), Lehman Brothers
(
LEH |
Quote |
Chart |
News |
PowerRating) and
Legg Mason
(
LM |
Quote |
Chart |
News |
PowerRating).
A rally in tech is fueling the Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating)
higher as well. The Nasdaq is trading over 1600 with strong volume and advancers
are leading decliners by 2199/1133. Two strong sectors helping push the Nasdaq
are:
The PHLX Semiconductor Sector
(
$SOX.X |
Quote |
Chart |
News |
PowerRating) is trading strong today. Every stock in the SOX is trading
positive. Some of the stocks that are stronger are KLA-Tencor
(
KLAC |
Quote |
Chart |
News |
PowerRating),
Maxim Integrated
(
MXIM |
Quote |
Chart |
News |
PowerRating), Novellus
(
NVLS |
Quote |
Chart |
News |
PowerRating), Linear Technology
(
LLTC |
Quote |
Chart |
News |
PowerRating),
Xilinx
(
XLNX |
Quote |
Chart |
News |
PowerRating) and Applied Materials
(
AMAT |
Quote |
Chart |
News |
PowerRating).
The Amex Biotechnology Index
(
$BTK.X |
Quote |
Chart |
News |
PowerRating) has been dropping like a
falling knife. Today it is reversing from the decline to trade up. Some of the
stronger stocks in the BTK are Genzyme
(
GENZ |
Quote |
Chart |
News |
PowerRating), Cephalon
(
CEPH |
Quote |
Chart |
News |
PowerRating),
Gilead Sciences
(
GILD |
Quote |
Chart |
News |
PowerRating) and Genentech
(
DNA |
Quote |
Chart |
News |
PowerRating).
Read Kevin Haggerty’s Views From The Trading Desk.
Mr. Haggerty noted
that weaker gold prices and a stronger dollar could mean a potential rally.
Pepsi Bottling Group
(
PBG |
Quote |
Chart |
News |
PowerRating) broke out
above its resistance on increasing volume to make a new high. PBG has a
TradingMarkets.com RS3 rating of 82 and an uptrending
ADX of 36.
Lear Corp.
(
LEA |
Quote |
Chart |
News |
PowerRating) is forming a
pullback from its recent high. LEA is holding a
3-month relative strength rank of 80 from TradingMarkets.com.
Independence Community Bancorp
(
ICBC |
Quote |
Chart |
News |
PowerRating)
is tracing out a pullback from its recent high.
ICBC is currently holding a
3-month relative strength rank of 87 with an uptrending
ADX of 48 from TradingMarkets.com.
Alliant Techsystems
(
ATK |
Quote |
Chart |
News |
PowerRating) is
pulling back to the 20-day moving average. ATK is holding a
3-month relative strength rank of 80 with an uptrending
ADX of 40 from TradingMarkets.com.
The volume in the market is strong once again
today, a good sign that more players may be stepping in. This
suggests that the rally has legs and may extend for several days to several
weeks.