There was a lot of selling over the past week, yet the PMO Index didn't move lower which strikes me as bullish short-term. So, I would say the short-term uptrend is probably intact although I don't really know.

The short-term trend is difficult to determine during these periods of market stress. Also, the days leading into Thanksgiving are seasonally favorable for stock prices, so that may be having an impact.

When in doubt about the market, consult the new highs/new lows. This chart shows they are still net negative, although there is considerable improvement from October. This chart shows that stocks are still under selling pressure, and this selling pressure is happening while the PMO index is near the top of the range. That isn't a good combination.

I think the market was helped a bit by the comments from the Fed in which they acknowledged the global economic slowdown, and this implies less upward pressure on rates. The positive reaction from the market seems to say that bad news for the economy is good news for stocks. We've now had years of this type of stock market so it shouldn't be too surprising, yet there I was being surprised.

Technology stocks have been this bull market's leaders, and lower rates help high PE stocks such as Technology. So if Technology rallies on news of lower rates, then even with a diminished but muddling economy, the stock market can start to move higher again. It's hard for me to wrap my head around this, but that's the way it is. Something to keep in mind.

The Long-Term Outlook

At the moment, the market-leading semiconductor index is below support. This looks like an important line in the sand.

Below this level, and the general market probably struggles. Above this level, and there is a chance that the market can pull together and move higher.

This is the chart that brought about the recent recognition of global weakness. Oil prices really control a lot. When oil prices are weak, rates can stay low, etc. So, weak oil prices are good news for stock prices if the world economies can continue to move higher... even if the economic growth is weak and choppy.

It is in everyone's interest for oil prices to remain healthy. So I would not be at all surprised to see oil start to reverse higher soon and perhaps bounce up towards its resistance level.

Junk bond prices are linked to the price of oil, so no surprise that the recent dip in oil prices is causing a dip in junk bond prices. Many of the oil explorers issue low quality debt to finance their operations, and their profitability relies on healthy oil prices.

At the moment, this chart is just showing a negative blip, and it could mark the beginning of a sideways consolidation. So it is too early to call this a major negative for the general market. But it is worth keeping this on the radar. If junk bonds start to tank like they did in 2015, the general market will have problems.

The ECRI index ticked lower again this week. When this index is in the zero to -5 range, the market is likely to struggle unless there is a quick turn higher in the index. I think that is what we are seeing in the market now.

If the index goes below -5, that is when there could be a significant market decline although it depends upon where we are in the bull market cycle. I am assuming that if the index drops under -5 in the 10th year of a bull, then it is likely to mean that the bull cycle is in final stages.

The market weakness is starting to attract investors to US Treasuries, and as a result bond prices are rising and yields are going lower. So I have changed the medium-term trend for bond prices to up.

Outlook Summary:

The long-term outlook is negative.  
The medium-term trend is down as of Oct-4.  
The short-term trend is not sure.
The medium-term trend for bond prices is up as of Nov-16 (prices higher, yields lower).

Investing Themes:

Cash
Inverse Funds
Health Care

Strategy During a Bull Market:

• Buy large cap stocks and ETFs at the lows of the medium or short-term trends.
• Buy small cap growth stocks on breaks to new highs in the early stages of short-term up trends.
• Stop buying when the short-term trend is at the top of the range.
• Take partial profits when the uptrend starts to struggle at the highs.
• Never invest based on personal politics.
• During a bear market, stay mostly in cash.

General Stock Market Commentary
 

MON Sector Strength - TUE Rates - WED Medium-Term - THU Commodities Currencies - FRI Sentiment - SAT Longer-Term