We are now entering week eight of the short-term downtrend. Eight weeks is an extended period of time for a downtrend. And the trend is just grinding lower and lower with few signs that it is ready to rally. In addition, and this is very important, there are way too many new 52-weeks lows every day.

I am feeling very negative about this market.

All eyes are now on the March low. If this level is taken out then the next major support is the December low.In fairness, stepping back a bit and considering only this chart below, a pullback of this degree seems reasonable considering the sharp rise from December to May. However...

This next chart below is the SPX equal weight which has already slightly broken below the March low. The period from February to May looks more like a topping pattern rather than a pullback correction.

We now have a cluster of Hindenburg Omens. In my opinion, a cluster of these is a signal that dark clouds are forming. I will be raising cash more aggressively.

Rates really tumbled on Friday. I think there is a real possibility that deflation is back.

The inflation-related indicators are confirming the weakness in rates.

The common-stock only Summation just went negative.

I am including this chart just to mention that the ECRI Index is weak, but holding up well above the -5% crisis level.

I should also add though that the major moves in the stock market generally occur just before this indicator breaks down.

Bottom Line: 

I will be aggressively raising cash. US stocks are in retreat, and bonds are now the clear leader.

It is interesting to see the strength of foreign stocks. I think it partly indicates just how weak US stocks have been.
 

Outlook Summary

The long-term outlook is cautious as of May-18. On watch for a downgrade to negative. The medium-term trend is down as of May-7.  The short-term trend is down as of Apr-17.

The medium-term trend for bond prices is up as of Nov-16 (prices higher yields lower).  

Investing Themes:

Treasuries, Cash

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. The stock market can do well regardless of which political party is in control.