Despite Recent Up Bars, the Stock Market is Still Weak

All three stock market indexes rose this week. But, they are all still below their :long-term bullish trend lines. They are also below the previous high that was on September 17. The Nasdaq Composite has more strength than either the Dow or the S&P. For example, the Nasdaq’s September 17 high is inside its bullish trend channel but not for the other two.

All three indexes are also below their short-term bearish trend lines defined by the August 5 and September 19 highs. The first of many steps that the stock market must do in order to show strength is to break this bearish trend line. If the market simply continues to move sideways it will eventually break this trend line. Further on, the biggest resistance is at the August 5 high; it’s in an area where there have been up and down waves for eight months. It is going to take a very powerful series of up bars in a row to move through that.

This is the second-straight week where all four stock sector groups lost relative strength.  The worst was the Financial Group  losing 2.6%, then the Cyclicals Group at -2.2, the Technology Group at -0.9 and the “best” was consumer staples at -0.3/ A lot of money is moving out of the stock market; it’s not merely shifting from one sector to another.

Below is the daily chart of the S&P 500.
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