The Market Was Ready To Turn, But It Didn't - Or It Hasn't Yet

The short-term uptrend continues. Based on the chart below, it looked like the market was ready to turn down, but it never did. Or it hasn't yet.

The chart above shows a big red bar for Thursday, so you'd think that was a sign that the short-term downtrend had started. But in the chart below, you see that the number of new lows dried up dramatically, so the trend didn't really change. It looks like the market changed its focus on Thursday and started buying the beaten up areas of the market.

The chart below shows a better look at the same thing. The NYSE stocks have been the stronger area of the market since mid-February, but the Nasdaq stocks have become so oversold that it was time for them to bounce higher.

The market doesn't behave this way very often, but this does remind me of the 2006 period in which the short-term trend never peaked until every area of the market joined in the rally, and then finally the short-term downtrend would kicked in.

The chart below is the PMO index for 2006. You can see how different it looks from the current period. The index usually didn't reach the top or bottom of the range and instead it often fluctuated in the middle. I wouldn't be surprised to see something similar this year.

I'm trying to remember if this was an easier or harder period to trade than usual? I was on the wrong side of the market going into August 2006, when I thought for sure that stocks had to resume their usual short-term up-down pattern. I remember that when I admitted my mistake and got in sync with the trend, I was much happier with my results. 

The bottom line is that it might be time to shift focus just a bit. Instead of automatically raising cash ahead of an assumed and inevitable short-term downtrend (which has worked really well for a long time now), maybe it is time for me to let the market stop me out of positions.

Changing focus, below is the bitcoin-crypto index, and it doesn't look very happy. Based on this chart, I think that money will be coming out of cryptocurrency and I am hoping that the cash will be invested in stocks such as the gold-miners, materials, and energy.

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Disclaimer: I am not a registered investment adviser. My comments reflect my view of the market, and what I am doing with my accounts. The analysis is not a recommendation to buy, sell, ...

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