The short-term uptrend continues, but the market is so stretched that it is time to start taking partial profits in order to lock in gains and to prepare for the next buying opportunity.
A few weeks ago I said that 70% on the NYSE Bullish Percent is the rule-of-thumb level where it is wise to take partial profits. We are almost there. There have been occasions when the bullish percent pushed higher than 70%, but those occasions are rare and I don't want to push my good fortune of being invested during this market run.
The NYSE Summation is not as extended as I would have expected. But I still think it is time to start ringing the register.
The 10-day Call/Put definitely looks extended. I think I said last week that I might wait until there was a red bar in this chart. Well, we got one on Friday and that's the signal to raise cash.
There is a bit of strength showing up in the inflation-sensitive areas of the market which may be a result of a little weakness (or consolidation) in the US Dollar.
Strength is showing in gold.
Outlook Summary
The long-term outlook is weak growth as of Oct.5.
The short-term trend is up as of Dec.12.
The medium-term trend for the price of bonds is down as of Oct.11 (prices lower, yields higher).
Investing Themes:
Technology, Biotechnology, Health Care, Clean Energy, Infrastructure, Insurance, Brokers, Payment Processors, Home Construction, Consumer Goods, Water Resources
Strategy During a Bull Market:
- Buy large-cap stocks and ETFs at the lows of the medium or short-term market trends
- Buy small-cap growth stocks on breaks to new highs in the early stages of market trends
- Reduce buying when the market trend is at the top of the range
- Take partial profits when the market uptrend starts to struggle at the highs
- The cardinal rule is never invest based on personal politics because the stock market can do well regardless of which political party is in control
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