The Nasdaq is in position to break its bullish trend line

The Nasdaq Composite dropped down this week to puncture, temporarily, its bullish trend line; the Dow and S&P 500 are nowhere near their bullish trend lines. The S&P and Dow are in severe wedge patterns where the top line is much flatter than the bullish trend line. This pattern occurs when demand is too weak to push the price higher. It is a general market “truth” that if a market cannot move one way, it will eventually move strongly in the other direction.

Both the Finance and Technology group have made huge moves since early June. Finance, made up of the Bank, Insurance and Diversified Finance (brokerages and investment houses) increased by an unheard of 3.13% while the Technology Group lost an equally impressive 2%. It’s very rare for a Sector Group to advance or decline more than a whole point. Only the bio-technology sector rose while all other sectors fell in the Technology Group. The smallest lost was in the Telecommunication Services Sector that fell 1.2%. In bullish times, it is usually the technology and cyclical stocks that propel the market higher.

Here are charts of the S&P 500 and the Nasdaq Composite:

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