The Stock Market is Bullish in both the Short and Medium Term

The stock market is bullish in both the short and medium terms. It sank hard at the end of July, bottomed on August 7 and 8 and then zoomed higher. The DOW is the weakest of the three major indexes, the Nasdaq Composite is the strongest. The S&P and the Nasdaq Composite moved above their mid July highs; the DOW did not. The DOW stocks are a more defensive play then are growth stocks. Money flowed out of defensive stocks and into growth stocks located in the S&P and Nasdaq.

In the table of Relative Strength Stock Sectors below, the Technology Group gained strength in the last few weeks, the Cyclical Group also gained strength as the Automobile, Machines, Building, Leisure and Energy sectors all gained strength. The Transportation Sector shrank just a bit; this is troubling and it is difficult to reconcile this with the reported strongish 4.2% U.S. GDP growth in the 2nd quarter. Our overall graph of cyclicals versus consumer staples is showing the consumer staples stronger over the last week. This is a signal of weakness. But, it seems there is much more bullish evidence.

Here’s the Relative Strength Chart of the Building Sector:building

 

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