The Short-Term Trend Is Unclear, Yet Continues

The short-term uptrend continues. Although, based on the recent behavior of the PMO index, the trend is a bit unclear because the index is so choppy. 

Here is a look at the PMO for the S&P 1500, and it confirms the choppiness of the index shown above. So far this month, the PMO has been moving sideways, but with a slight upward bias. It has a negative look, although I am thinking it is demonstrating that many stocks have paused in their uptrends while the economy works past the shock of the recent wave of COVID-19 infections.

The stochastic of the SPX equal-weight is easier to interpret at the moment than the PMO. This is a clearer, more expected pattern and it gives me a simple indication that the market is getting close to the point where I'll need to be just a little less aggressive in my accounts.

This means that I will get more cautious about buying into any new stock breakouts. Instead, I'll give my current holdings some time to work their way higher and I'll trim from the laggards.

There is much discussion about the current state of the market. Some people are very concerned about excessive valuations, speculative IPOs, small-caps, and frothy bullishness. Even at Investor's Business Daily, they are worried about the indexes being too far above their 50-day averages.

These are all good points and I don't have the answers, so I to stick to what I know and just try to time the short-term trends based on the charts that I post here. Basically, I get aggressive near the bottom of the short-term trend, and then get less aggressive near the top of the short-term trend.

Just because I try to stick to what I know doesn't mean I can't venture a guess about what is happening in this market. My thinking is that as investors ran up stock prices in smaller-cap cyclicals in advance of the stronger economy expected later this year, they turned away from the safety of the large-caps such as Microsoft (MSFT).

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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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