Stock-market highs aren’t keeping pace with the lows

The bullish trend line of the S&P 500DOW and Nasdaq are all intact. The long-term trend, using monthly bars, started in 2009 (after the great recession) has not been broken. On the other hand, the top of the trend channel has been steadily shrinking as highs have not kept pace with lows. As time goes on, the separation between where the highs should be and where the top of these highs actually are gets larger and larger. The underlying cause of this is an absence of strong demand.

My table of stock-market sectors continues to show a divide between the Technology Group and the Cyclicals Group. The Technology Group gained 2.51% while the Cyclicals Group lost 0.5%. Stocks in both of these groups are considered growth stocks. A broad-based rally is not possible with a big part of the growth stocks sputtering. The 7.6% huge loss in relative strength of the Transportation Sector is also critical because it shows us how weak manufacturing is. Manufacturing makes up less than 20% of the U.S. economy but the effects are felt widely due to all the different types of service companies that support manufacturing.

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

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