The PMO index started moving higher seven trading days ago, so I will label the uptrend as beginning on May 26. It hasn't really felt like the beginning of an uptrend, though. The major indexes have been out-of-sync and breakouts were not following through to the upside. However, Friday, June 4 was constructive for many stocks, so perhaps the general market uptrend is starting to come together for all the major indexes in the short-term.

The only problem is that, based on this PMO index, the oversold, lower-risk period for buying stocks was a couple of weeks ago. So if we get a few strong days early next week, the PMO index could easily reach up into the top of range very quickly, which is where the market becomes overbought and is at a higher risk for new purchases.

Investor's Business Daily pointed out that the major indexes tested their 20-day averages on Thursday, but then bounced off these levels and closed very bullishly on Friday. I definitely like the looks of this chart.

The call/put ratio has been trending higher in bullish fashion, and the turn upwards happened a few days before the PMO index turned upwards. That was an early signal that the overall trend was turning higher. 

I received a nice note from someone who suggested adding the RSI indicator to this chart to help spot the turning points in the short-term trend. I like the idea, and I have been experimenting with the RSI as well as the MACD and stochastic on this chart.

I think adding a momentum indicator is helpful because it shows when the call/put ratio is in the oversold/overbought range. I am not showing it here only because I like to keep the charts clean and simple when I post them. Thank you for the suggestion.

After the choppy, whipsaw behavior of the market over the last couple of months, I'm sure no one will be too surprised if the market doesn't cooperate next week. However, that kind of skepticism towards stocks is exactly what is needed to get rid of the excess optimism in the market in order to launch a strong move higher.

The bottom line is that I think there is a good chance that the market will rally next week, so I'll probably deploy my available cash early Monday. But if I deploy the cash, I will do so with the knowledge that I am not purchasing stocks during a short-term oversold, lower-risk period, and that I'll have to be ready to turn right around and sell if the market isn't pushing the indexes or the stocks I own higher.

Otherwise, one disappointment is the transportation index, which didn't participate on Friday. This important index doesn't look particularly strong at the moment.

On the other hand, some good news is that leadership might be returning to the semiconductors. This is not the greatest looking chart of an index, but the leading stocks in this group look bullish. 

The materials took a break for a few weeks, but now look ready to move higher again. This index never closed below the 20-day during this consolidation. Very bullish.

The financials couldn't look better, and also haven't had a recent close below the 20-day. Every dip has been a buy.

Obviously, the inflation-sensitive and rate-sensitive stocks continue to be leaders. That is where I will focus my purchases next week. But I also have an eye on these semiconductors because the leaders look strong.

Outlook Summary

• The short-term trend is up for stock prices as of May 26.
• Contrarian sentiment is unfavorable for stock prices as of Nov. 14.
• The economy is in expansion as of Sept. 19.
• The medium-term trend for treasury bonds is down as of Oct. 10 (prices lower, yields higher).