Despite the correction, the stock market is still bullish

The stock market is still in a mild correction. It is mild because the losses in the indexes have been relatively small. Looking at it from the vantage point of weekly bars, all three major stock indexes are still well inside their bullish trend channels. All that’s happened, is that they’ve pulled back from an overbought position and are getting closer to a buy area.

Our Relative Strength Stock Sector Table shows that the Cyclicals and Technology groups are equally strong while Finance and Consumer Staples have lost ground. Particularly notable was a 9.5% gain in relative strength in technology hardware and a 4.5% increase in the automobile  sector. A surprising and huge 8.9% gain in the basic materials sector suggests that this may be the beginning of long-feared and long-predicted inflation. The capital intensive aerospace sector and the machines sector both gained. The only significant weakness in the report was in real estate. Overall a very bullish report.

Here’s the Relative Strength Technology Sector Chart:technologyHere’s the Relative Strength Basic Materials Sector Chart:basic_materials

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