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