The stock market is bullish despite very big weakness in the energy sector

The stock market continued to roar back from its early October fall. The DOW, S&P 500, and the Nasdaq Composite moved up, although at a more gradual pace then they had right after the October bottom. Take a look at these same charts from a longer-term perspective (S&P, DOW, and Nasdaq Composite. All three major stock indexes are still in their long-term bullish trends.

My table of relative-strength stock market sectors shows a significant improvement since last week’s report with the notable exception of the energy and basic materials sectors. The glut of crude oil stemming from the explosion of production in the U.S. due to fracking on private land has forced Saudi Arabia to continue its prior production levels. This is because low prices are here to stay. Opec has much less influence on the price of crude then they did before the fracking boom. U.S. production is still growing at a rapid rate although a continued dump of prices will cause a shake out among drillers. The bottom line is that there is very little pricing power in many areas.

Here’s the relative strength chart of the Energy Sector:energy

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