The stock market is in a correction

The stock market moved sideways over the last four days after plunging hard the previous week. This plunge definitively broke the bullish trend that had been in effect since February, 2016. The current sideways motion is telling us that it cannot move higher and, simultaneously, that it cannot move lower. The market it hit with selling pressure as soon as it tries to move higher and there is powerful buying waves when it tries to move lower.

 

My graph of cyclicals divided by consumer staples has been crashing since January 11. This was weeks before the recent plunge. It is the cyclicals and growth stocks that power the market higher; it cannot move higher for very long on the backs of consumer stocks and utilities.

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