The Stock Market is in a Bearish Trend

The divergence, where the S&P was a bit more bullish than the other two indexes has ended. All three stock indexes are very weak. They have taken out the late September low but are still above the August low. The FANG (i.e., Facebook, Amazon, Netflix and Google) that had propped up the stock market during most of 2015, are all suffering along with the rest of the market. Netflix and Amazon are in the worst shape. The lion’s share of Amazon’s cloud service subscribers are Unicorns (i.e., a venture-capital software company that doesn’t earn any money); they’re destined to greatly disappear as soon as the recession takes hold.

My relative-strength stock market sector table shows the stock market’s defensiveness and weakness in detail. The defensiveness is seen mainly in just one sector: Utilities. It has zoomed higher by an amazing 15.6% since January 4.  Three percent is, generally, a high level. The Banks and Diversified Financial sectors both lost 6%. Despite the Federal Reserve’s recent increase off of zero short-term interest rates, the war on savers and the war on banks has not ended. The Automobile sector has crashed 13.4%. Other big movers down included the Leisure (-13.4%), Pharmaceutical and Biotechnology (9%), and Computer Software (-11.7%).

Here’s the relative-strength chart of the Utility Sector:

utilities

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