The stock market is still weak.

The Nasdaq Composite has sunk the most in the recent correction, the DOW the least. But, they are all still within their bullish trend channels. The Nasdaq began its recent bullish run in mid April, both the S&P and DOW in early February. The Nasdaq broke below its bullish trend line on Thursday but moved up above it on Friday. The markets’ move up on Friday was not high enough to pass Thursday’s high and the volume was lower on Friday than Thursday. Therefor, this does not qualify as a two-day bullish turnaround. In the absence of a signal of strength, we are left with the weakness we have been experiencing.

The Relative Strength Market Sector Table showed weakness in every group except for Finance. It escaped a loss by the thinnest of margins: flat since September 1. Notable pockets of strength since September 1 include the Aerospace Sector up 4.2%, Apparel up 1.4%, Semiconductors up 1.3% and the Transportation Sector up a nice 2.3%. The increase in the Transportation sector mirrors the slightly-bigger-than-sluggish 4.6% increase in GDP for our 2nd quarter. The biggest losses were in the Automobile (-7%), Machines (-4.1), Building (-3%), Energy (-4%), Real Estate(-5.9%), Technology Hardware (-2.8%) and Electronics (-3.3%) sectors. Confirming all this weakness was the overall graph of cyclicals versus consumer staples; it has sunk dramatically. The market hasn’t dropped enough, either in time or price, to start considering shorts. Cash, therefor, is king.

Here’s the Relative Strength Chart of the Real Estate Sector:real_estate

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