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A few weeks ago, the market acted like it was going to crash. Now what? I really don't know, but it certainly seems as though traders have been feeling better about stocks in recent days.

The PMO index has been at the top of its range for over a week. With the PMO at this level, it appears to be signaling to lighten up on stocks, maybe take some profits, or at least to be a bit more cautious in the short-term.

When the PMO is at the top of its range, I watch for signs of the next inevitable short-term downtrend. The first signal is to see one of the major averages close below its five-day average. At the moment, there isn't much in the chart below to suggest a new short-term downtrend has formed.

The bullish percents don't seem to be suggesting a short-term downtrend, either. These indicators are pointing decisively upwards and in a very bullish fashion. But do these indicators have further upside potential?

If we have entered a bear market, and if we are experiencing a bear-market rally, then I would expect to see these bullish percents near where they were in February, or certainly well below where they topped out in November. This means that for the NYSE, we should see the bullish percent start to struggle at this level.

The following indicators are very similar to the bullish percents. Both are near the February highs, so I wouldn't expect them to be able to rise too much further if this is a bear market. 

The Summations also continue to point upwards in a very bullish fashion. This is another bullish indicator.

The AD line has exceeded its March high while the SPX has remained below its March high. I would call this a bullish diversion. It will be very interesting to see what the SPX does when it reaches its March high. If it pushes through this level with strength, then that would be another positive data point for the bulls.

The 200-day for the major indexes is the most important line in the sand for the market. Both are just at their 200-day, as well as the March high.

The all-important technology ETFs are not as encouraging as the broader indexes, however. I continue to be doubtful about a market in which technology is lagging the broader indexes.

There is very little sign of weakness to be found in the junk bond ETF. This is a fairly bullish-looking chart in which the price seems to be building towards an important breakout higher. This is not what the bears would want to see, as this is yet another chart in favor of the bulls.

If you want to know what is really happening to stock prices behind the scenes, take a look at the number of new lows. This chart shows that the number of new 52-week lows is at harmless levels for both exchanges. This is a bullish indicator.

Bottom Line

I'm cautious short-term and on the fence longer-term. If technology stocks start to lead the market, then I'll have no choice but to get on board with the bulls.

Meanwhile, the AD line for global markets continues to point upwards very nicely. This is a bullish indicator.

Gold has been holding onto its uptrend nicely, even though it has pulled back from way-overbought highs.

The following Europe ETF has actually been hitting new highs.

Meanwhile, this Package ETF has been looking rather weak. There are certainly no signs in this chart of promising economic activity.

Based on the following chart, I have a hard time believing that many Dow theorists are bullish towards stocks at the moment. The Transports are significantly under the December peak.

Wow, this next ETF is looking good at new highs. I guess there are no plans to cut defense spending.

Outlook Summary

• The short-term trend is up for stock prices as of April 22.
• The medium-term trend is neutral for Treasury bond prices.

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