A Different Sort Of Uptrend

The short-term uptrend that started on June 21 continues. The uptrend isn't the sort that we are accustomed to seeing, but it's still an uptrend. What we are used to seeing is all or most stocks move up or down in price together within a broad market trend.

In order to time buys and sells in sync with the broad market trend, we are used to looking for the PMO index to reach all the way up to the top of the range, or all the way down to the bottom of the range, and then raise or deploy cash accordingly. 

Starting in mid-March, stock prices have been controlled by the trend in the 10-year yield so that those that benefit from higher yields go up, and those that are hurt by higher yields go down, and vice versa. As a result, stocks are split into two camps and the PMO isn't able to reach the top or bottom of its range, and we don't get the clear market timing signals that we want. 

For now, I am going to continue to show my usual charts and formats, but obviously my timing tools need to be adjusted to match the changing market dynamics.

The major indices dipped under their five-day averages on Thursday, but the strong close of the session suggested that on Friday they would pop back above to continue the trend higher. On Friday, they did trade above their five-day averages, and with very strong closes, as well. 

The major indices are on a consistent, relentless march higher despite the endless discussion that you hear and read about. People who simply own a passive mutual fund have done quite well in this market while also spending their time doing more productive things than worrying about every tick up or down (like I have).

The chart above shows us that the most influential stocks have pushed the cap-weighted market index higher, but the chart below shows that the rest of the stocks are now poised to push the equal-weighted index higher as well. This chart looks very bullish to me.

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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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