The stock market has probably begun a new trading range

The stock market has probably entered a new trading range defined by the September 19 high and October 16 low. Trading ranges are much easier to recognize after there have been two or more phases. This one is still in the middle of its first phase (it moved down and is probably not finished moving up). All three stock indexes (DOW, S&P and the Nasdaq Composite) moved above the half way point of the September 19 high and October 16 low on Tuesday. The S&P and Nasdaq closed Friday just below their former bullish trend line; only the DOW moved back inside its bullish channel. But, the close of the market on Friday at its high for the day and the week is very bullish.

 

My stock sectors relative strength table shows the Technology and Cyclical groups growing by 0.74% and 0.81% respectively while the Consumer Staples group gained only 0.57% and the Financial Group lost 1.1%. It’s bullish when cyclicals and technology lead the stock market. The big drop in the Energy Sector (-5.3%) mirroring nationwide reductions in the cost of gasoline, along with the big gain in the Transportation Sector bodes well for the economy. Strength was also seen in Building, Real Estate, Computer Software, Health Care and Bio Technology.

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

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