The Nasdaq is still not bearish

The Dow and S&P 500 have been bearish since March 1. But, the Nasdaq Composite has moved sideways. Divergences do not continue for very long. Either the Nasdaq will pull up the S&P and Dow or the Nasdaq will, finally, drop. The U.S. government bond market has been dropping since last July. Research shows that bonds change trend between 6 and 18 months ahead of stocks. This makes it likely that the stock market will start to sink, including the Nasdaq, before the end of the year.

My relative-strength stock sector table shows the Cyclicals Group ahead of the Consumer Staples. This was supported by gains in the Real Estate, Aerospace, Machines, and Building Sectors. The Banking Sector continued being very weak. The Real Estate Sector gained 3.9% since April 1 for the biggest gain in the table. Here are fundamentals for this sector:

SYMBOL   LAST QTR’s EARNINGS   3-YR SALES GROWTH
HCP -28% -2%
KIM 3% 12%
PLD 3% 18%
RLGY 0% 4%
TWO 20% 4%
HST 5% 1%
AGNC -44% n/a
WY -13% -9%
NLY -3% -23%

 

The average earnings was -3.4% and the average sales growth was 0.63%. This is awful especially considering that this group gained the most in April. This is yet another example of the stock market divorced from fundamentals.

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