The Stock Market Turns Defensive

The stock market has turned defensive. The S&P 500 dropped after 
first rising above the top of its bullish trend channel in March and 
again in April. This, rising above the trend channel and then falling 
back inside, is a sign of weakness. The Nasdaq and the Dow broke the 
thorough the bottom of the bullish trend channel. 

Our Stock Sector Relative Strength Table has turned upside down from 
a couple of weeks ago in certain respects. Technology is now the 
strongest group riding the huge gains in telecommunication services  
and pharmaceutical and bio-technology. The weakness in the stock 
market is mirrored by a reduction in the strength of the cyclicals 
group and increasing strength in the consumer staples group. The 
Basic Materials sector continued its long-term drop sinking a huge 
8.4% during April. This is a sign of deflation. Ask yourself where 
there is pricing power in the economy.

Here's the Basic Materials' Sector Relative Strength Chart:
basic_materialsHere's the Pharmaceutical and Bio-Technology Sector 
Relative Strength chart:pharma

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