The stock market is bearish

On Friday, the Nasdaq Composite joined the Dow and S&P by breaking  the bullish trend line that began on the August 24 low. I don’t know how long this nascent bearish trend will continue. But, there is no doubt that the stock market, and in fact most financial markets, are a gigantic bubble. In constant 2013 dollars, the real median wage has not changed since 1989; it’s $54,000. During this same period, the S&P 500 increased by 1000%. In 1994, worldwide total debt was $40 trillion compared to total GDB of $28 trillion for leverage of 1.4. Today, it’s $225 trillion total debt compared to only $50 trillion total GDB for a historic never-seen-before leverage of 4.5.

The three stock indexes are bearish and the graph dividing cyclicals by consumer staples has shown defensive consumer staples winning for months. So, all the parts of the stock market are weak. My stock sector table shows this weakness in detail. Out of eleven sectors in the Cyclical Group only Retail and Aerospace gained; the rest were losers. All three financial sectors were losers. The Technology Group gained a small 0.37% by virtue of a large gain in the bio-technology sector. But, this sector is very over priced. The worst sector is Energy. It has lost an astonishing 9.9% since December 1st.

Here’s the chart of the Energy Sector:.

energy

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