Lower highs and lower lows

The Nasdaq Composite is the weakest index; it has been dropping more since the January 13th high than the S&P or Dow. The January 13th high was above the February 1 high and the February 1st high was above the February 18th high – in all three indexes. The recent lows in both the S&P and Nasdaq Composite have been lower than the August low. So, for the most part, we have lower highs and lower lows.

My stock sector table shows huge losses, and a couple of big gains. Gains or losses that are bigger than 3% in a month are extremely high. The following are much higher than 3% and there is another week to go in February. Computer Software dropped 7.4%, Apparel dropped 6%, Real Estate lost 5.2% and Auto’s lost 5.8%. Transportation (5.7%) and Basic Materials (12.1%) both gained. This bounce in Basic Materials is bound to be short-lived as the fundamentals for drilling and mining are still very bearish.

Trends tend to continue longer than most people think, no matter how experienced. Stocks have been dropping since early December. There is a bearish trend line in place since the middle of January.

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