The S&P is still below its 2015 summer highs

The stock market has tried and failed to penetrate the rock-hard resistance it is facing more than forty times since late 2014. Economic news continues to be lack-luster at best. Take, for example, the much heralded employment report released on Friday by the Labor Department. Under the big increase to 287,000 new payroll jobs was no increase in the average work week. This means that most of the new reported jobs had to be part-time so that adding in all the new jobs would not increase the hours worked.

 

The S&P is the strongest of the three major indexes; it is very close to the 2015 summer highs. The Nasdaq composite is much weaker than either the Dow or S&P. The relative-strength Building sector shot up more than 3% over the last week but the real-estate sector sank during the same period. These two charts tend to follow each other.

 

The stock market is extremely overvalued at 24.5 times current earnings of $87 per share. But, that is 12% below $106 per share in September, 2014. The economy is also in bad shape. It is teetering on the edge of another recession. According to the U.S. Census Department, the ratio of business inventories to business sales is 1.4; that’s the highest it has been since the recent recession. The ratio has been steadily increasing since early 2012.

 

Here’s the relative-strength chart of the Building Sector:
building

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