This market’s correcting after a long bullish run was expected

The stock market dropped last week. But a drop was expected given how high the stock market averages were in their bullish trend channels. If we get a drop all the way down near the bottom of these channels it could be an excellent time to buy.

Our Relative Strength Stock Market Sector table shows a mixed bag of strength and weakness indicative of a correction rather than the beginning of a bearish trend. Automobiles rocketed up another 4.7% in August after a 4.1% gain in July. Cyclicals were the best performing group. But the Technology group was the weakest. Te only big drop was in Parmaceutials and Biotechnology dropping 1.7%. The rest of the group was mostly flat. The 1.8% drop in the Transportation is worrisome for the overall economy because it provides a window into the quantity of products shipped.

Here’s the chart of the Relative Strength Automobile Sector:autoHere’s the chart of the Relative Strength Transportation Sector:transportation

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