Saturday, November 17, 2007

Troubled sectors

I've included a few charts today of specific sectors that are already in a bear market or are dangerously close. Of course we all know the financials are in trouble. The thing that's troubling here is that they make up 20% of the S&P. Unless they can all of a sudden find new life and start rallying strongly I don't see how the general market is going to make a lot of headway. The other obvious one is housing. No need to elaborate there. Third on the list is retail. This one is concerning since we're in a time of year when retail should be moving up strong as it has every other year since 03. Instead it's dropping like a stone. Since the consumer is 70% of totally GDP this just doesn't bode well. The transports are also flirting with bear market status. I could have also included the semi's here. The SOX rolling over right before Christmas isn't a particularly bullish development either.

The last one is a chart of the Nikkei which is now down 18%. The third largest economy in the world is heading into a bear market. If all this talk of the global economy still being strong is correct then why is Japan heading south?