A new short-term uptrend may have started on Friday, and the chart below shows an index that looks (to me) like it wants to break higher.

These bullish percents ticked up on Friday after hinting at a reversal higher on Thursday.

I like the looks of this SPX chart as well. Each pullback has been a higher low, and each advance has been a higher high.

The small caps are the weak link in the current market. Last week I showed a chart of this same index that looked like it had broken down decisively, and was headed lower. I am sticking with that call until this index can break above the price point of about 960. So, I think the sell signal is still intact, however.

I generally avoid this kind of chart with a trend line slicing through a price range, but this one looks convincing.

If this chart were on the CMT test, and I was asked to comment on it, I would say that the longer-term trend is still lower. Even though the index gapped up above the downtrend line, it failed at the February high and made a short series of lower lows.

But, in the short-term, the trend is encouraging because the index is still above the downtrend line, and the recent pullback held at support. In fact, in the current price range, it looks like it could be building a nice consolidation base in order to burst out higher in the weeks ahead.

One more short-term chart. Investing in the direction of junk bonds works well in my opinion, and this ETF is breaking higher.

Okay, I convinced myself that the short-term trend is higher again, and the uptrend will be confirmed when this PMO index ticks higher.

The Long-Term Outlook

If you trust the ECRI Index (as I do) to provide a very good look into the future of the US economy, then you have to think that things are improving. 

The economy is still weak, and growth is choppy. In addition, there are tons of frightening headlines from around the world. But the fact remains that there is enough growth in the US for the best companies to have good earnings. 

This means that, on balance, we should be buyers and owners of stocks, but with plenty of caution.

Sector Strength

The sector alignment continues to improve nicely, but still looks defensive. 

Having the Q's back in leadership is a very good sign for the stock market. And strength among Technology, Consumer and Industrials is very good too.

However, bonds are still performing well and the reliable-dividend payers still lead the market which indicates a degree of market stress.

Bottom line: Growth industries are starting to perk up which favors stock prices overall.
 

Outlook Summary

The long-term outlook is cautious but improving. Upgraded from negative Feb. 2.

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). 

Investing Themes:

Dividend-Payers
Technology
Health Care
Consumer
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.