The stock market is very near to resistance

The S&P 500 and Dow broke their short-term bearish trend lines but are well below their long-term bullish trend line. The Nasdaq Composite did not break its short-term bearish trend line but it is above its long-term bullish trend line. All three indexes are well below their previous highs. That’s where the heavy resistance is. This is because the longer a market moves sideways within a relatively tight range, the more resistance it creates. The three index were at their highs for months without being able to break through.

My chart dividing cyclicals by consumer staples shows the consumer staples hugely ahead of the cyclicals for the last couple of months. But, this is at odds with my stock market sector table. It shows the Cyclical Group increasing their relative strength by an astonishing 2.5% during October. The Financial Group continues to weaken but there were a couple of notable bright spots: The Technology Hardware sector zoomed higher by 4.4% (that’s very high) in only a bit more than one week. The Transportation sector turned from a negative to a 1.4% gain. This suggests that, contrary to news reports, that manufacturing is improving. After all, the trucks are transporting something.

This is still a very difficult market to trade. Keep your protective stops tight and watch the market near the close every day.

Here’s the relative strength chart of the Technology Hardware Sector:technology

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