DOW THEORY UPTREND IS CONFIRMED

Dow Theory holds that the Dow Transports and Industrials must both hit new highs to confirm an ongoing bull market. The ability of the Dow Industrials to exceed their January high has done just that. That doesn't tell us how far the bull market will run, or for how long. It just confirms that a bull market still exists. The Dow has been a laggard for several months and is one of the last indexes to hit a new high. [The NYSE Composite also hit a new high last week]. A lot of this week's Dow strength can be attributed to upside breakouts in some key components.

DOW LEADERS... The Dow's ability to finally hit a new high is largely based on the strong price of the five stocks shown below. All have rallied to 52-week highs over the last week. In order of relative strength, they include General Electric, DuPont, Cisco, Intel, and Wal Mart. Although Wal Mart has been a laggard for sometime, all five stocks are doing better than the Dow during the first three months of the new year.