The Stock Market is Weak Short Term But Still Bullish Medium and Long Term

The stock market is weak but it has not gone down far enough to call it bearish. It has broken the short-term bullish trend that began in early March. But the market is still over bought from a long-term perspective. The S&P and the Nasdaq Composite are both above the top of their trend channel on the weekly chart starting with the March 13, 2009 and October 7, 20111 lows. The Nasdaq Composite would have to move below its February low in order to move back into its long-term trend channel. But the market is still above the mid point taken from the March 7 high and the February 4 low. In summary: the market is bearish short term
and still bullish medium and long term.

Our sector report has turned defensive. Both the Cyclical and Technology Groups lost ground in March. Our overall graph of cyclicals divided by consumer staples has turned down. The Building Sector was particularly hard hit, losing almost 7% in March. The one bright spot was the Transportation Sector’s gain of 2.5%. This suggests the economy is performing better than the market.

Here’s the relative strength chart of the Building Sector:buildingHere’s the relative strength chart of the Transportation Sector:transportation

 

 

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