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The US stock market opened strongly this morning, bouncing back after a sharp two-day pullback last week. MoneyShow's Tom Aspray's analysis suggests large-cap stocks may lead the next rally phase and he has two favorite Dow stocks. 

The stock market put in a strong performance Friday with almost 3,000 advancing stocks vs. less than 1,000 declining stocks. The sharp rebound from last Thursday's early slide makes the second scenario I outlined last week now look more likely.

The Dow Industrials picked up strength last week as it did close higher for the week unlike the S&P 500 or Nasdaq 100. The weekly relative performance analysis has indicated that since early in 2012 the SPDR Diamond Trust (DIA) has been underperforming the S&P 500.

Since the start of 2012 the Spyder Trust (SPY) is up 21% versus just a 14.7% gain for the SPDR Diamond Trust (DIA). There are now some early signs that this may be changing. Another strong close Monday should signal a rally above last week's highs similar to what happened in March 2012.

The German DAX Index is very strong early Monday and looks ready to complete its corrective pattern as it continues to lead the US market higher. The stock index futures are also showing nice gains in early trading.

Two stocks look ready to help lead the Dow Industrials higher as they have strong weekly technical patterns.

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Chart Analysis: The weekly chart of the SPDR Diamond Trust (DIA) shows that it dropped to its lowest level of the month last Thursday at $138.06.

• Friday's nice gain appears to have reversed the downside momentum as the Dow Industrials A/D line (see chart) moved back above its WMA.
• The weekly chart shows that resistance from the 2012 highs, line a, is still being tested.
• A close above $140.40 should signal a surge to the upside with monthly pivot resistance at $141.71.
• The quarterly R2 pivot level is at $143.56 with the weekly starc+ band at $144.57.
• The weekly relative performance has been in a downtrend since early 2012 but the RS line closed last week above its WMA.
• The downtrend, line b, is being tested and the RS line has formed higher lows, line c.
• The weekly OBV turned up last week and a move through key resistance at line d, would be quite positive.
• There is initial support now in the $138-$138.70 area with monthly pivot support now at $137.12.

The weekly chart of International Business Machines (IBM) shows a broad trading range, lines e and f, that goes back to early 2012.

• IBM hit the weekly starc+ band in late January when it reached a high of $208.54.
• On a close above this level the 127.2% Fibonacci target is at $218.
• A weekly close above the all-time high at $211.79 has upside targets in the $238-$242 area.
• The weekly relative performance peaked in late 2011 and still shows a pattern of lower highs, line g.
• The RS line is trying to bottom, line h, but needs to move above its WMA its previous peak to confirm a bottom.
• The weekly OBV shows a much more bullish formation as it broke through resistance, line i, in the middle of January.
• The OBV has now retested the breakout level and will look very strong with another higher close this week.
• There is initial support now at $200 to $198.11. IBM gapped above the quarterly pivot at $197.64 to start off the year and this now is important support.

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