HeadlineCharts - Friday, The Short-Term Trend

The short-term uptrend continues, but we are on watch for a new short-term downtrend because the SPXEW has closed under the 5-day.

Some indicators look to be rolling over, but others, like the general market PMO Index shown below, are still moving higher.

The SPX-only PMO Index looks like it is now pointing lower. This indicator often changes direction a few days before the general market PMO Index shown above. So my guess is that a short-term downtrend begins soon... if it hasn't already.

The Industrials look ready to roll over, short-term.

Sentiment

The Investor's Intelligence Newsletter Sentiment Survey is showing about 55% bulls (up from 53% bulls last week, and 47% the week before) as reported by VIX-Squared on Twitter.

55% is right at the threshold where sentiment starts to work against stock prices, so I am interpreting this as a slightly negative reading. It isn't a red light flashing to sell stocks, but it does indicate that maybe it is time to raise a bit of cash and/or to be a less aggressive if you want to buy stocks.

I highly recommend paying attention to the Investor's Intelligence weekly survey. It has served me well for a long time. It isn't perfect and doesn't always work, such as during extremely strong or weak market trends. However, most of the time, it provides very helpful market timing signals.

In general, when the number of bulls is below 45%, there is probably too much pessimism towards stocks which favors a period of higher stock prices. When the percent of bulls rises above 55%, it is in an indication that bullishness is starting to become excessive which works against stock prices.
 

Outlook Summary:

The long-term outlook is cautious. The ECRI index points to an economic slowdown.
The medium-term trend is up as of May-10. Sentiment indicates caution.
The short-term trend is up as of Jul-06.Watching for signs of a short-term top.
The medium-term trend for bond prices is up as of Jun-19 (yields lower, prices higher).

Investing Themes:

Technology
Medical Products
Cyber Security
Payment Processors
Small and Micro Caps
Gaming 

Strategy:

• Buy large cap stocks and ETFs at the lows of the medium or short-term trends.
• Buy small cap growth stocks on breaks to new highs in the early stages of short-term up trends.
• Stop buying when the short-term trend is at the top of the range.
• Take partial profits when the uptrend starts to struggle at the highs.
• Never invest based on personal politics.