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Another Rally With Pockets Of Weakness

|Includes: AAPL, CSX Corporation (CSX)

 The major stock indexes have staged another rally. Everything that one could throw at this market has been swallowed as the major stock indexes seem to defy gravity. The highly followed Dow Jones Industrial Average has rallied higher by 820.0 points in just eleven trading sessions. The move higher from the March 16, 2011 cycle pivot has been nothing less than remarkable. Geopolitical events in Japan, the Middle East, and Europe, have had hardly any negative effects from the March low. However, today the market is signaling some signs of weakness.

The first sign of weakness that we are seeing is in copper today. The iPath Dow Jones-UBS Copper Subindex Total Return ETN(NYSE:JJC) is trading lower by $1.11 to $56.68 a share. Copper is viewed by many investors and traders as an economic barometer. When this industrial metal does not participate in a stock market rally traders will pay attention to this action. Weaker copper has often lead many big declines in the past. This time around the JJC still has a lot of daily chart support around the $55.00 area.

The next sign of weakness for the market is the action in the railroad stocks. This morning CSX Corp.(NYSE:CSX) made a new 52 week high for the year at the open. Since the high print of $80.42 at the open the stock has reversed sharply lower creating a possible outside day on the charts. When market leaders reverse it is a time to take note. CSX stock is trading lower by $1.66 to $78.37 a share. The big daily chart support level for CSX is around the $73.00 level. Norfolk Southern Corp.(NYSE:NSC) is also trading lower after making a new 52 week high at the open trading lower by 0.28 cents to $69.27 a share. When the railroad stocks decline it is often a sign that the transport index make need to pullback.

Apple Inc.(NASDAQ:AAPL) is also failing to trade higher with the market today. This stock is the market darling and is owned by most institutions and retail investors. When this market leading stock fails to participate in the rally it definitely raises some red flags and must be watched closely.

Traders and investors are certainly enjoying the stock market rally over the past ten trading sessions. However, when markets get euphoric traders must watch for clues that a pullback could be around the corner. Today, the market is signaling weakness in copper, railroad stocks, and Apple Inc. It may just be a non-event and these leaders could just be taking the day off, however, it is worth noting.

Nicholas Santiago