The market is below its July 2015 level

The stock market is below its level from last summer. The Dow reached 18,300 on March 2, 2015 and again on May 5, 2015 and has not been higher. The S&P hit 2,134 on May 20, 2015 and 2,132 on July 20, 2015 and has not been higher. The Nasdaq Composite hit a high of 5,237 on July 20, 2015 and has been considerably lower since. So, since late 2014 there have been dozens of failed attempts to move higher. The most recent move, that started in mid February, has had decreasing volume and small and halting steps forward.  This is just the opposite picture seen during the beginning of a new bullish trend.

My auto sector zoomed higher since April 1 by a very high 4.4%. There are a lot of cars being sold, or more accurately leased, but the car companies have been scraping the bottom of the barrel to find the newest buyers. This is one example of the beginning of what will be huge wave of unpaid auto loans and leases.  An even higher (9% since April 1) and, more surprising sector is basic materials (composed mostly of mining companies). But, the mountain of material already mined by China has led to big problems.

If you have ETF’s or mutual funds invested in the stock market, this would be an excellent time to put this money in to something safe – like U.S. bonds. The important thing is safety, not yield.

Here’s the relative-strength chart of the auto sector:

auto

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