Now is a great time to be out of the stock market and in cash

The Dow and S&P have broken their weekly bullish trend lines that had been in place since October 2011. The Nasdaq composite is the only index to have it’s weekly bullish trend still intact. The losses were widespread and deep. All the indexes closed at their lows on Friday. This is an excellent time to be out of stocks and in cash.

 

The chart of cyclicals divided by consumer staples has dropped precipitously following the indexes. But the stock market sector table shows pockets of strength. In the Technology Group, Telecom reversed from -1.2% to 1.6%, Phama improved from -2.5% to -1.6% and Electronics reversed from -0.3% to 0.2%. In the Cyclicals Group, the Auto sector improved from -2.2% to 1%, the Aerospace Sector improved from 1.6% to 2.1%, and Real estate zoomed higher from 1.2% to 4.7%.

 

The chart below is the relative strength chart of the Utility sector. When the stock market is weak, money flows into safer and more defensive issues. The utility stocks are an example of this.
utilities

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