Major Indexes March Higher
The general market is supposed to be in a short-term downtrend, at least according to this chart below that shows the PMO Index at the bottom of its range. However, the major indexes continue to march higher as they respond favorably to better economic news. Also, the rally in stock prices has broadened out very nicely into a number of different stock sectors and industries.
The number of new 52-week lows has settled way down which supports the stock market rally.
Junk Bonds are in rally mode which helps confirm higher stock prices.
So now what? The market is making new highs while the PMO Index is at the lows. The indexes and the PMO are out-of-sync?
I don't think it is a big deal, and we've seen this before. Basically, I think that all it means is it isn't the best time to be trying to time the short term cycle. So, some of my cash has been going into the holdings in which both the price and the relative strength are breaking to new highs.
Also, side note, my accounts were hurt on Friday by my holdings of the gold miners. I have been purchasing some of the best performing gold and silver stocks as they break above significant buy points. However, with such a favorable jobs report, these stocks sold off and I am now wondering if this sector will be an under-performer going forward. I am not sure whether I should hold or sell.
The Longer-Term Outlook
Looking back to late September, it really seemed like there was a good possibility that the market was going to sell off significantly similar to 2018.
In the fall of 2018, the market was selling off with confirmation from the ECRI Index which was pointing decisively lower.
However, in the fall of this year, the market got wobbly again, but the ECRI was pointing higher, not lower, and stock prices firmed up and headed higher.
I point this out to promote the value of watching the ECRI Index which, at the moment, is pointing higher still. Bullish.
It might be too late to jump into the market with two feet, but, based on the favorable look of the ECRI Index, it isn't too late for thoughtful purchases in areas of the market that are showing strength.
Outlook Summary
The long-term outlook is weak growth as of Oct. 5.
The short-term trend is down as of Nov. 18.
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
Disclaimer: I am not a registered investment advisor. My comments above reflect my view of the market, and what I am doing with my accounts. The analysis is not a recommendation to buy, ...
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