Stock Market Week in Review

The Nasdaq Composite, the DOW and the S&P 500</a> all rose in the first half of August only to fall since. The stock market has rounded over – a pattern frequently seen at market tops. No matter where one tries to draw a bullish trend line during the recent action underneath the important lows, the resulting line is inevitably broken late in August. The market would be strong if it was doing the opposite: breaking higher through the early spring highs.
Stock sector analysis (see below) is balanced but leaning towards market weakness. The overall technology group zoomed higher with only semiconductors loosing strength, and retail improved by 3%. But capital goods and consumer durables both lost more than 2%. These are the economy’s big-ticket items. Transportation continued to lose relative strength. It may be our closest window to the economy. After all, the hotter the economy is the more goods there are that need to be shipped. The overall graph of cyclicals versus consumer staples shows the cyclicals zooming ahead until a hard drop breaks the gain.
The end of long-term established bullish trends make it difficult to trade. The current bullish trend began in November of 2011. That makes this a good time to concentration on dividend stocks designed to be held longer term. 

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