This most recent signal of a short-term uptrend was a good one. The uptrend appeared on March 29, and then the next day the PMO ticked up to confirm.

Now the PMO is getting near the top of the range. Once it reaches its maximum, or starts to falter, it will be time hit the pause button on buying, and to ride higher with the purchases made over the last several days.

These bullish percents are also confirming nicely. I have come to rely on this chart more and more.

The breakout and follow-through for this index was impressive.

Last week I said that if this small cap index broke above 960, then I would consider the index back in an uptrend. Well, that happened on Friday and now I like this chart pattern as a potential long.

Here is a new chart that I have started using. It is a five-day average of the new highs/ new lows. It went positive early January and has signalled a positive market trend every since despite a few dips. It reminds me of the summation index. I find new highs/ new lows to be a very reliable insight into the underlying health of the stock market.

The Long-Term Outlook

The market leading Semiconductors are on a tear and have now broken out of a 12-month base. This looks very bullish for this group of stocks, and for the general market.

I heard someone say on the FastMoney podcast that the Semiconductors are highly correlated to Chinese stocks, and this chart below confirms. How did I not know this?

Invest in the direction of Junk bonds. This chart says we should be owning stocks.

There is a lot of talk about the bearish inverted yield curve, but I think the inversion isn't as much of a problem while oil prices remain under control. Short-term rates probably don't need to rise until the oil prices force the hand of the Fed.

I am not sure what the tipping point is, but we are now in the range where I am certain the Fed now has this chart in its line of vision. For now, though, I think this chart is quite bullish for stocks.

The ECRI Index warned us of the slowing economy last fall, and, in my opinion, it is now signalling a pick up in the economy. Once it crosses above the zero-level, the longer-term outlook will probably be raised to positive but with the caution of a weak, muddling-along economy.

The Dow Theory Chart looks positive to me although just a couple weeks ago it was worrisome. The Transports have been a bit temperamental, but are now looking much better. Plus, the chart patterns, particularly for the Transports, look like bullish inverted head-and-shoulders.

With both of these indexes pointed higher, I think this chart is bullish for the general market. I am aware there are Dow Theory rules that I am completely ignoring.

Yields

These US Treasury ETFs are still trending higher much to my surprise, but with the outlook improving for the world economy I expect to see selling here soon. I am moving out of Treasuries for now.

Sector Strength

Big news here. Bonds went from leader to laggard. A sure sign of stock market strength.

The defensive Health Care and Staples are fading which is more good news for stocks although I am inclined to pick up some Health Care on the dip.

With oil showing strength, I am expecting to see more strength from the oil producing countries. But these ETFs shown below are dollar-denominated, so as long as the US Dollar is strong, these ETFs will under-perform US stocks.

Outlook Summary

The long-term outlook is cautious but improving. Likely to be upgraded to positive soon.

The medium-term trend is up as of Jan-4. 

The short-term trend is up as of Mar-29.

The medium-term trend for bond prices is up as of Nov.16 (prices higher yields lower).Likely to be downgraded to negative soon.
 

Investing Themes:

Large-Caps, Mid-Caps, Dividend-Payers
Technology, Semiconductors
Consumer, Retail
Industrials
China, Brazil

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.