The Stock Market Is In a Bearish Trend

The new bearish trend is defined by the November 3 and December 1 highs. There has been a higher high and a lower low in the S&P. In the Dow, it was a lower high buy not yet a lower low. The Nasdaq composite is still within both its medium-term and long-term bullish trends. The former is defined by the August 24 and September 29 lows. This is a divergence; usually, the major indexes mirror each other. I’m guessing that the Nasdaq will follow the other indexes south.

My graph dividing cyclicals by consumer staples provided advanced warning of the stock market’s weakness starting in the late spring! This graph has been definitively bearish since then. The biggest loser among my relative-strength sectors was energy; it lost an amazing 9% since December 1. In light of the overall market sinking, the relative-strength numbers indicate those parts of the market falling faster or slower than the whole. Autos, Building Transportation and Drugs are all falling fast. Consumer goods (e.g., Colgate and Proctor Gamble) are much stronger than the overall market. I strongly say: either learn to short stocks or get out the stock market into something safe such as U.S. Government Bonds, Notes and Bills.

Here’s the chart of Nasdaq Composite:

nd100

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