Here Comes the Dow…

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The world’s most famous stock benchmark has been caged up all year. Is it ready for a breakout?

The Dow Jones Industrial Average ($INDU) is the best-performing major index in the last month, even though it’s lagged on a year-to-date basis. (See the RadarScreen® below.) It’s also the only major grouping of stocks that hasn’t pushed to new record highs since February’s gut-wrenching selloff.

Uncertainties about trade policy are one big reason for the Dow’s weakness. Some of that anxiety seems to be fading now that Washington and Beijing slapped relatively mild tariffs on each other. So much for a business-halting trade war…

RadarScreen® with key indexes. Notice how the Dow’s 21-day change is greatest but its year-to-date change is the smallest.

Interestingly, Boeing (BA) and Caterpillar (CAT) are the top-performing Dow members in the last week. Both are known for their exposure to China.

At the same time those names have come to life, major tech stocks that led earlier in the year have languished. For example, Facebook (FB) and Netflix (NFLX).

The Dow rose 0.7 percent to 26,247 yesterday — its highest close since January 29.

In conclusion, this isn’t a trade recommendation and everyone needs to do their own homework. But there are signs of money shifting back to traditional blue-chip stocks as the geopolitical climate eases.

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David Russell is VP of Content Strategy at TradeStation. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.