The stock market is bullish but sluggish


The stock market is bullish. It  has been bullish on a long-term 
basis for a long time, as we reported in the March stock letter. 
But it is moving forward in a sluggish manner. On Friday, for 
example, the market gapped up at the open following the Labor 
Department's release of their employment report. It is important to 
note that the lowering of the unemployment rate had more to do with 
the reduction in the labor force (i.e., the labor participation 
rate) than from a significant increase in jobs.  But there was no 
follow-up gain; the Nasdaq 100 lost ground from it's gap open. 
Generally speaking, the movement following the open is much more 
indicative of the market's health than anything to do with the gap. 
The market is advancing,however.

Market sector report mirrors the market's sluggish nature. The 
overall graph of cyclicals versus consumer staples has turned 
decisively bullish in the last couple of weeks. But there are both 
good and bad signs under the covers. Encouraging signs for both the 
stock market and the economy comes from an increase in relative 
strength in consumer durables, automobiles and transportation. The 
drops in real estate, and retail along with the increase in energy
are worrisome.

Here's the transportation relative strength chart:
Here's the real estate relative strength chart:

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