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Prices broke down on Monday, reversed on Tuesday, and ultimately ended the week strong. In addition, new NYSE 52-week lows have remained at relatively harmless levels for about two weeks.

The PMO index signaled that stocks were ready to rally starting Tuesday, April 22. In just five days, the PMO index went from the extreme low of its range to the extreme high of its range.

This chart is a look at the short-term trend based on the five-day average. A short-term uptrend is obviously going to close on most days near or above the five-day average, and the last four sessions look good in this regard.

In addition, the Friday close broke out slightly above the near-term peak of about two to three weeks ago. The price pattern has the look of an established low, perhaps a double-bottom pattern, and recent prices seem to be working on the right side of the pattern.

The bullish percents are certainly looking better, having established their lows two to three weeks ago. This chart is encouraging.

Here is a look at the same two bullish percents but with a two-year view. Both indicators look like they could move still higher before entering a resistance area and then cooling off.

This next chart shows indicators similar to the ones above, but these two are still relatively weak considering how the market has rallied. So, is this weakness a good or bad sign for the market over the next few weeks?

I'm thinking the low number of stocks still trading below their 50-day lines shows just how weak the general market has been. I'd be surprised if the number of NYSE stocks trading above their 50-day lines exceeds 50% before the next short-term downtrend begins.

The summations are confirming the short-term uptrend, as they have curled nicely upwards.

I've redrawn the longer-term uptrend line for the junk bonds, and now the chart looks a lot better and makes more sense. Looking at this chart, the longer-term uptrend was never broken, and it shows that prices have recovered quite well. This chart is definitely bullish for stocks in general.

I pointed out a few weeks back that the price peak of the SPX in February occurred with a negative divergence with the AD line, which peaked in November and was well below this peak as the SPX peaked. Now, the chart of the NYSE AD line shows recent data points corresponding well with the price of the SPX, which confirms the downtrend of the market.

Here is my favorite indicator at the moment. The tech and semiconductor ETFs are weak, trading well below their 200-day averages, and, in fact, the 200-day averages and now pointing downward after having recently rolled over negatively. In addition, the semiconductor ETF is still trading below the resistance level established in August 2024. This is a bearish indicator.

The following chart shows the SPX trading below its 50-day average. The 50-day is generally a line in the sand that establishes whether a recent trend is positive or negative. I wouldn't get too interested in stocks until this index trades above the 50-day average.

The histogram of the five-day average total US net new highs / new lows in the lower panel provides an extra view into the health of the market. Although the histogram has improved enormously, it needs to be in the black before buying stocks aggressively.

Bottom Line

I continue to own gold miner stocks, although they could be facing a period of price correction after a big run-up in prices. I continue to hold stocks in my long-term account, but otherwise, I am mostly maintaining cash in my trading accounts.

Meanwhile, here is one interesting ETF that never broke the longer-term trend. This ETF has a very good list of stocks among its top 10 holdings.

This next ETF was on the ropes just last week, but now the price is already challenging the former highs. I'm not a buyer, however, because my view is that if the US market trends lower, then it will take this Europe ETF down with it eventually.

This Industrials ETF didn't break down below its longer-term trend either, but it now looks to be just underneath some fairly major resistance. This is an area of the market I find really interesting, but I think I would need to see this ETF pullback, retest the trendline, and hold above before I would be a buyer.

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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