Very few stocks are ready to buy and many are bearish

The stock market sank last week. The Nasdaq Composite sank the most, the Dow the least, with the S&P dropping just a bit more than the Dow. Investors have switched to the safety of the Dow; it gained 3.3% in December, the S&P 1.8% and the technology and growth-laden Nasdaq only 1.1%. Historically, in times of big growth, it has been the opposite, with the growth and technology companies leading. I examined each of the IBD 50 (i.e., the top 50 stocks for Investors.com) and did not find a single one as a good buy. Many were distinctly bearish, including many of the top entries in the list. Many others had accelerated at too high an angle and were dropping or moving sideways.

My relative-strength sector table shows a huge gain in the Semiconductor Sector and a sizable gain in the Automobile Sector but those are the only highlights for growth consisting of the Technology and Cyclical Groups. The stock market has been bullish since late June. The S&P reached the top of its trend channel on December 13 and has sunk since then. The Dow broke above of its trend channel on December 7. So, it’s over bought. The Nasdaq Composite’s highs have not kept pace with its lows. This has led to a wedge pattern. To summarize, the Dow is likely to conintue down as it is above its trend channel. The S&P is likely to go down because it has retreated from being at the top if its trend channgel. The Nasdaq Composite is the weakest of the three and already retreating from its already shrunken trend line.

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