Industrials, Transports In A Tug Of War With Small-Caps, Semiconductors

The Dow Jones Industrial Average (.DJI) and Dow Jones Transportation Average (.DJT) set new all-time intraday highs on Monday, May 10. The Russell 2000 Index (.RUT) and Philadelphia SE Semiconductor Index (.SOX) have negative weekly charts.

This provides a huge tug-of-war for the bulls and the bears. A warning comes from the Nasdaq Composite (.IXIC), which fell by 2.5% on Monday.

Let’s Study The Weekly Charts:

The Dow Jones Industrial Average (34,742) still has a positive but extremely overbought weekly chart. The average is well above its five-week modified moving average at 33,777. Its 12-week slow stochastic reading is 94.36, so the average is still in an inflating parabolic bubble formation. The Dow 30 remains well above its annual, semiannual and quarterly pivots at 33,425, 32,645 and 30,546, respectively.

The Dow Jones Transportation Average (15,929) still has a positive but extremely overbought weekly chart. The average is well above its five-week modified moving average at 15,093.99. Its 12-week slow stochastic reading is 96.73, which keeps the average in an inflating parabolic bubble formation. The Dow transports is well above its annual, semiannual and quarterly pivots at 14,424.55, 12,120.82 and 12,176.78, respectively.

The Russell 2000 Index (2,212.69) opened Monday above its five-week modified moving average at 2,244.13, then quickly faded below this key level. Given this break lower, its 12-week slow stochastic reading declined to 65.49, down from 68.22. This downgrades the weekly chart to negative. The small-cap index is above its annual, semiannual and quarterly pivots at 2,120.34, 1,880.34 and 1,855.03, respectively.

The Philadelphia SE Semiconductor Index (2,967.11) opened Monday below its five-week modified moving average at 3,101.27. The SOX has a declining reading for its 12-week slow stochastic reading, which declined to 69.10, down from 76.30. The SOX ended last week with a negative weekly chart. The SOX index is above its annual, semiannual and quarterly pivots at 2,120.34, 1,880.34 and 1,855.03, respectively.