The stock market is sluggish. It’s still moving sideways.

Sideways stock market moves can lead to the highest profits because trending moves are preceded by these sideways moves. Getting in early gives you a better chance of picking up the majority of the coming trend. Consider that there have only been two major pull backs in the stock market in more than twenty years (i.e., the 2000 to 2002 “tech wreck” and the 2006 financial crisis).

 

All three major stock indexes are in a wedge pattern where the top is flat and the bottom line is angled higher thereby constraining prices. The stock market is historically weaker in May and June (take a look at the newly updated seasonal charts, particularly of the S&P 500. Under “Futures Seasonal Charts with Verification Tests”).

 

The Technology Group suffered a bearish reversal in the Semiconductor sector. The Cyclicals Group enjoyed widespread increases in relative strength. Notable was the positive reversal in the Transportation Sector from a big loss to a moderate gain. The Federal Reserve’s continuation of super-easy money has been helping finance in general and the banks in particular. The relative strength of the Finance Group was more than double the next-highest group, the defensive Consumer Staples.

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

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