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Major indexes in the green as Dow pushes above 8,763

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Stocks have turned decidedly green as we approach the final hour of trading as it looks like bearish traders may be looking to close out some positions into the weekend. The Dow Industrials (INDU) 8,796 +0.96% has broken above near-term resistance from the July 30 relative high of 8,763 and now has the 8,856 or psychological 9,000 level coming into play.

Dow Industrials breadth is positive with the 25 of the 30 components showing gains. Daily strength is found in shares of Home Depot (NYSE:HD) $28.26 +4.2%, which traded a 52-week low yesterday, with today's strength hinting that bears may be starting to get a little less greedy with any gains and looking to lock in short-term gains after the markets impressive comeback in the last three sessions. Also showing strength today is Alcoa (NYSE:AA) $26.40 +3.28%, despite yesterday's cutting of earning's estimate by Goldman Sachs.

Dow laggards have Honeywell Intl. (NYSE:HON) $32.79 -3.45%, Hewlett Packard (NYSE:HPQ) $13.29 -1.91% and Intel (NASDAQ:INTC) $18.08 -1.63% weighing on the Dow's gains.

Current bullishness looks like short-covering as Treasury YIELDS remain pegged at their lows. The longer-term 30-year Treasury YILED ($TYX.X) 5.120% has broken to a relative low and now firmly below the 5.2% level of YIELD support.

Once again we see some divergence from the intra-day breadth between the NYSE and NASDAQ. Breadth is positive on the NYSE with advancers outnumber decliners by a thin 3 to 2 margin, while NASDAQ breadth is negative with decliner outnumbering advancers 5 to 3.

New highs versus new lows is starting to par itself a bit on the NYSE with 55 stocks hitting new lows versus 35 stocks achieving new highs, while the trend of new lows greatly outnumber new highs on the NASDAQ continues today with 107 stocks at new lows versus 19 stocks at new highs.

Sector strength is lead by the Gold/Silver Index (XAU.X) 66.21 +7.3% building gains to a session high and breaking above its 200-day moving average. Oil service stocks as depicted by the Oil Service Index (OSX.X) 79.41 +4.19% have shrug off this morning's International Energy Agency's lowered forecast for global demand growth for oil, while oil stocks as depicted by the Oil Index (OIX.X) 284 +1.32% have reversed this morning's 2% decline and moves above its July 31st relative high of 282, which mimics the Dow's technicals.

Sector weakness has become more limited with healthcare stocks and the Morgan Stanley Health Provider Index (RXH.X) 330 -2.67% showing weakness after the Federal Trade Commission (FTC) said that it would step up scrutiny of past hospital mergers and groups of doctors to make sure they had not joined forces simply to fix prices. The FTC's new focus will be on determining whether previous mergers have actually benefited patients or simply allowed hospitals to charge more. A Wall Street Journal article noted that federal judges have generally not been convinced of the threat to rising prices.

Shares of Community Health (NYSE:CYH) $24.21 -6.63%, Triad Hospitals (NYSE:TRI) $39.85 -4.06%, Health Managment Associates (NYSE:HMA) $19.90 -3.86%, LifePoint Hospitals (NASDAQ:LPNT) $33.13 -4.10% look to be most impacted from this news.

Jeff Bailey
Senior Market Technician
Option Investor


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