As the Dow hit an historic all-time high in early trading today, MoneyShow’s Tom Aspray looks for opportunities in a heretofore lagging sector that seems to have bottomed out.
Stocks ended in positive territory by Monday’s close as the major averages were able to absorb two different waves of selling. The weak opening in the Dow tracking SPDR Dow Jones Industrial Average ETF (DIA) was followed by a brief bounce and then another test of the lows before DIA rallied for the next three hours to close near the day’s highs.
The improvement in the relative performance of the Dow Industrials over the past two weeks indicates it is ready to outperform the S&P 500. In yesterday’s The Most Oversold Dow Stocks, DIA was listed as the seventh most oversold. The daily Dow Industrials A/D line made new multi-year highs Monday, which is also a positive sign.
Many of the large-cap stocks have been lagging the market for some time and the long-term charts indicate that they are close to completing major flag or continuation patterns. The bottoming action in the technical indicators as well as their closeness to Fibonacci and long-term pivot support makes these high yielding stocks look attractive.
Chart Analysis: The weekly chart of E.I. du Pont de Nemours (DD) shows a long-term flag or triangle formation, lines a and b, that goes back to the 2011 high of $57.00.
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