Weekly Stock Market Review

On Thursday the stock market (as measured by the S&P 500) tried to move above the previous high of July 5 and failed. Friday confirmed the previous day’s eakness by falling and closing at the day’s lows. That’s bearish in the short term. This shows that the market has begun a new trading range. The TR’s bias seems to be bullish at the moment but it is too early to have confidence in this. The reason for the bullish bias is that the previous low of July 12 is considerably higher than the earlier low of June 26. A bullish trend line can be drawn under the June 26, June 28 and July 12 lows. If this line is respected it could make for a short-term buying opportunity.

Stock market sector analysis underlies the weakness in the overall market and the economy. The energy sector zoomed higher by 9.6% so far this month after gaining 4% last month in relative strength. Higher energy costs hurt the economy. Semiconductors swooned by 4.1% on weak demand for computers. Technology leads bullish trends. Now technology is weak as are important pieces of the cyclical sector. Notably, transportation has lost 2.4% so far this month after crashing by 7.2% last month.

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