Short-Term Selling Pressure; Headline Charts

There isn't much to say about the stock market in the short term other than that stocks are experiencing short-term selling pressure. 

The two major indexes are under their 50-day averages, which signals at least a short-term market correction. The QQQ looks worse, however, with its 21-day crossing under the 50-day, and the Friday close falling beneath short-term support.

The charts of the two leading ETFs look similar, with closing prices beneath the important moving averages and the 21-day under the 50-day for both. The market isn't heading significantly higher anytime soon until buyers come back to these two ETFs.

Bottom Line: I remain cautious with more than half of my trading account invested in SCHD, which is a conservative dividend-paying ETF.

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Treasury yields moved higher on Friday. It looks like a trend of higher yields has been established (higher yields mean lower Treasury bond prices). Higher Treasury yields work against stock prices longer-term.

The 2-year Treasury yield continues to tick higher and is well above Fed Funds, while the 3-month is now doing the same. The Federal Reserve cannot significantly lower rates when the chart looks like this.  Fed Funds will follow the 2Y and 3M higher.

This ETF took a solid hit last week as it fell sharply. Let's see if it holds the long-term support. I like these stocks longer-term.

The construction ETF has been a strong performer in the past but has moved sideways most of this year. I like these stocks too, but I worry that their best performance may be behind them.

Semiconductors have pulled back from their extended levels, but is it enough of a pullback? I really don't know, but I will be watching closely.

This is a 2-year chart of the same Semiconductor ETF. The correction reached about 24% off the highs before finding some short-term support.

The pullback for this ETF has been about 12.5%, and the closing price is near its uptrend line, which is not a bad setup. I like this ETF but with a stop under the support lines.

Here is a look at the same ETF but with a much longer timeframe. I'm not planning to buy much until the election gets close, but this will be one of the ETFs that I'll focus on.

Outlook Summary

The medium-term trend is DOWN for Treasury bond prices

Strategy 

• Deploy cash by adding to stocks while the market is near its short-term cycle lows.

• Raise cash by partial sales of stocks while the market is near its short-term cycle highs.

Trader Discipline

• Corrections are opportunities

• Never invest based on personal politics