It is time to be looking for signs of the next short-term downturn. There is nothing particularly bad, but the market is struggling a bit, the bullish percents have paused and new 52-week highs have pulled back.
The PMO Index posted a red bar on Friday after about three weeks of positive action.
The Long-Term Outlook
The Leading Indicators favor higher stock prices as the data continues to point to economic growth.
The ECRI Index has ticked lower for a couple weeks, and the ECRI Institute has been consistently warning of a global economic slowdown (although not a recession).
However, in my experience using this indicator, stock prices don't suffer longer-term until the index dips under the zero-level. Also, bear market behavior usually requires this index to dip below the -5 level. And last, if the economy does struggle, it shows up as weakness in the small caps even if the large cap indexes look healthy.
Every week I think that the M2 growth will finally start to perk up, and then it let's me down. It seems I never learn, and here I am again feeling optimistic that it is bottoming and getting ready to move higher. If it does move higher, precious metals will benefit.
This chart continues to favor an outlook of higher stock prices.
Oil price and Treasury yields had a bad week, although both are still well within their trends. The red arrows are there to emphasize this week's sell off, but I am expecting the larger uptrends to continue.
Looking at this chart, it is hard to imagine anyone being overly concerned about stock prices going forward. If there are lower prices ahead, it certainly isn't showing up in the advance/declines or up/down volume.
There is a lot to think about regarding this market, more on Tuesday.
Outlook Summary:
The long-term outlook is cautious.
The medium-term trend is up as of May-10.
The short-term trend is up as of May 7. Looking for signs of the next ST downturn.
The medium-term trend for bond prices is down.
Investing Themes:
Software
Medical Products
Cyber Security
Payment Processors
Small and Micro Caps
Strategy:
- Buy large cap stocks and ETFs at lows of the medium or short-term trend.
- Buy small cap growth stocks on break outs to new highs during 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.
MON Sector Strength - TUE Rates - WED Medium-Term - THU Commodities Currencies - FRI Sentiment - SAT Longer-Term
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