Only the Nasdaq composite is still above its long-term bullish trend; both the S&P and Dow are still below.

The stock market fell hard on Friday following an up thrust on Thursday. The long-term bullish trend is still in effect only for the Nasdaq Composite; the S&P and Dow are well below their bullish trend lines. However, the short-term bullish trend lines, created since the August 24 rout, were broken in all three stock indexes. Until this avalanche of selling pressure dissipates, it will be impossible for the stock market to pick up enough steam to move through its previous highs.

My chart dividing cyclicals by consumer staples show the cyclicals ahead over the last couple of weeks. This is despite serious weakness in the stock market indexes over the same period. If the cyclicals make another move higher, they will break the bearish trend line that started in mid May.

The stock market sector table shows severe weakness in Finance, especially banks. They are being hurt by the persistence of zero short-term interest rates. The banks have a much easier time making money where there are normal market rates. The big winner is Technology, especially the Computer Software sector. The Basic Materials sector continues to plunge, mirroring predictions of large-scale deflation caused by scattered and non-thought-out investments in china and other emerging markets.

Below is the relative strength chart of the Computer Software Sector:software

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