Midday Market Check - The Dow Jones Industrial Average Jumps 150 Points

We head into the second half of the session with the Dow Jones Industrial Average (DJIA) up 150 points and flirting with new high. The S&P 500 (SPX), Nasdaq Composite (COMP) and Russell 2000 (RUT) are each up more than 1%.

Today's strongest groups are the Amex Gold Bugs Index (HUI), Semiconductor HOLDRS (SMH), and Oil Service HOLDRS (OIH). The iShares Treasury Bond (TLT), Amex Biotech Index (BTK), streetTRACKS Gold (GLD), and CBOE Internet Index (INX) are the weakest areas.

I ended the week noting the Dow was in a position to challenge its recent highs. Today's rally is generating some buzz and I would expect that to build if we see a close in the upper portion of the daily range. I also touched on the Russell 2000 and its battle with resistance. Today's rally has the RUT back above the overhead hurdle but the close will be key. And speaking of the small-cap index...

Over the weekend Bernie Schaeffer sent a quick email to his analyst team that I found interesting. He noted that the Russell 2000 (RUT) was essentially unchanged over the last 3 months and was hitting a relative oversold reading. The last chart below highlights the range and shows the 14-day Relative Strength Index (RSI). As Bernie said in his email the RUT "has not been this oversold (14-day RSI) since March bottom."

Note - additional thoughts from Bernie can be found by starting with this post and following the embedded link in each post.

Chart Courtesy of Thomson Reuters

Click here for symbol descriptions

Chart Courtesy of Thomson Reuters

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