Friday’s loss takes out two weeks of gains

Stocks lost big on Friday. The Dow and S&P 500 sank below their bullish trend lines; only the Nasdaq Composite stayed above. The close was near the day’s low and the volume was above average but not excessive. This is a complete bearish picture with no exception. But, its veracity is dependent on confirmation. So, confirmation is true only if Monday’s action is another loss.

 

Both the overall cyclicals divided by consumer staples and the cyclicals group in my relative-strength sector table showed gains last week; there’s no evidence of Friday’s drop in all three major stock indexes. Looking deeper inside the sector table may point to an explanation: strength in the cyclicals group was concentrated in only one sector; the leisure sector expanded by an amazing 10.6% since April 1. But, seven of the ten sectors in the cyclicals group lost ground. Notable were the sizable losses in the building sector and the significant gain in the energy sector. Neither of these is good for the economy. Additionally, the technology group was weak. Five of the seven sectors in the technology group were losers. But money has yet to flow into the defensive consumer staples; the utility sector lost 1%.
Here’s the relative strength chart of the Leisure Sector:leisure

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