The stock market pushes higher to new high ground

Stocks continued their bullish push last week rising, in the case of the S&P and DOW, to new historic highs. The fact that these two indexes are in fresh high ground makes is harder for the sellers to get the upper hand. Old highs in the past, even if these highs were years ago, work as resistance. This is because so many individual investors buy at highs and wait, in some cases a very long time. to finally sell when they are even.

Our Market Sectors Table shows a continued rotation out of defensive stocks and towards growth. The Automobile, Consumer Durables and Transportation sectors all increased in relative strength. The Energy sector continued to lose strength suggesting a decrease in gasoline expenses in the near future. The Basic Materials sector continued to drop strongly suggesting that deflation is one of our current economic problems. Our overall chart of cyclicals divided by consumer staples has the cyclicals much stronger. This mirrors the strength of the overall market.

Here’s the Relative Strength Chart of the Auto Sector:
autoHere the Relative Strength Chart of the Basic Materials Sector:
basic_materials

 

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