FANG support ends, money flows to the financial sectors

The S&P has been bearish for the last ten days while the Nasdaq Composite has been bearish since  June 9. The recent employment report from Labor Department did not show any significant growth. There was no growth in the average work week; it moved from 34.4 to 34.5 hours per week, bumping along the bottom of hours worked. It was the same thing with the participation rate at 62.8 up from 62.7 last month. It is this figure that puts a gigantic lie to the 4.4% unemployment rate; the unemployment and the participation rates cannot both be true. Factory orders moved from -0.2% last month to -0.8% this month; so, no growth.

In my July stock letter I wrote that support for the FANG stocks had ended. They had been supporting the market, so what’s keeping the stock market from falling? We find a plausible answer in this week’s stock-market sector table. It shows the Financial Group rocketing up by an unheard of rate of 6.1%. Compare that with with 0.9% for Cyclicals, -0.64% for Consumer Staples and -1.49% for the Technology Group. All of the financial group rose including the bank, financial misc, and insurance sectors.

Here is the relative-strength chart of the Bank Sector:

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