The S&P is above the Nasdaq and Dow but they’re all weak

The stock market broke through both the late September and August lows before recovering (a bit) and moving sideways. The S&P recovered the most and moved back into the bottom of its bearish trend channel. This created a divergence with the DOW and the Nasdaq Composite. They are still below the bottom of their bearish trend channels. Divergences tend to be short in duration. It is likelier that the S&P will sink to be with the the other two indexes than the opposite. All three indexes are below the mid point of the December 29 high and the January 20 low. Even though Friday’s close was near the day’s high, as long as the price is below this important mid point, it is likely that prices will stay below it.

Despite the recent price bounce, the stock market as seen from my relative-strength stock-sector table shows extensive weakness and defensiveness. All three sectors in the banking group dropped with banks and miscellaneous finance dropping more than 6% (i.e., more than 3% is huge). Pharmaceutical and biotechnology dropped almost 11% and technology hardware dropped 7.4%. Automobiles dropped an amazing 9.5% and leisure dropped almost 9%. The psychological health of the public seems to be rather depressed as the alcohol and tobacco sector zoomed up by almost 10%. Log in to stock-compass to see the whole table and the individual sector graphs along with the stocks that make up each sector.

Here’s my relative-strength chart of the Automobile Sector:


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