It looks like Friday was the start of a new short-term downtrend. Thursday revealed weak market breadth, but on Friday breadth was a lot better until the news from the Strait of Hormuz.

In order to call a new short-term downtrend, I think you have to at least have the major indexes dipping under the 5-day. So on Wednesday when this index below dipped, it was a set up for a new downtrend when there was another indicator confirming. 

New lows were elevated all week on the NASDAQ, and then on the NYSE starting Wednesday. 

Thursday was a Hindenburg Omen, and when these occur at the top of the short-term range they are a lot more significant than when they occur at the bottom of the short-term range. However, just one Hindenburg isn't enough to get too excited about.

There is plenty of evidence that the short-term trend is wobbly, but I am not sure if it is the start of something bigger or just a market that just needs some rest.

One chart I'll be watching for the next couple of weeks is the one below. The JNK weakness on Friday is confirming the weak stock market, but if this ETF starts to move higher again then weak stock prices are probably a buying opportunity.

The market ran to new highs on news of the dovish Fed, but will there be follow through? 

Just for fun, here is a look back at the 1999-2001 period. The ECRI dip under -5 signaled a serious economic slowdown. 

Here is a look at the 2006-2009 period. Another good signal from the ECRI index when it dipped under -5.

Here is the current period. There was a brief dip under -5 in December, but it quickly reversed and the market hit new highs. What to think? Despite our skepticism, we have to sit back and enjoy market gains until the ECRI gives us another panic signal.

Outlook Summary

The long-term outlook is cautious as of May-18. 

The medium-term trend is up as of Jun-07. 
The short-term trend is down as of Jul-19.
 

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

Investing Themes:

Treasuries, Cash
Top-Rated Stocks in Uptrends.

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