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Everyone who follows the stock market knows that a huge rally occurred on Wednesday, and by Friday, new highs were set for many of the most important stocks, ETFs, and Indexes. Tuesday's nice rally off the lows with a strong close at the top of the daily range hinted at the rally coming on Wednesday.

The PMO index is starting to be useful again, as it cycles from its extreme highs to its extreme lows and then back up again. 

These indexes also hinted at a Wednesday rally by closing on Tuesday above the 5-day averages.

The bullish percents didn't offer a hint on Tuesday, although they did confirm nicely on Wednesday. The Nasdaq bullish percent continued to rise bullishly, but the NYSE bullish percent did not. I'd call this a non-confirmation for now.

The Summation Indexes showed buy signals.

The price of this junk bond ETF rallied off its uptrend line very nicely. This is bullish indicator.

New 52-week lows were a bit concerning. With such a strong rally, you would expect that there would be very few new lows. The number of new lows on the NYSE wasn't alarming but definitely worth noting, and the number on the Nasdaq remained elevated. This chart makes me cautious.

Technology stocks perked up this past week, although they weren't all leaders. These SPDR ETFs continue to look good, but they aren't leading the market higher. 

Bottom Line

I was fully invested on Tuesday so I had a good Wednesday, and I started to take profits on extended stocks on Friday. I now have about 40% cash. It seems too early to be selling but some of the stock rallies looked very extended, so I locked in some profits. I now have some cash to deploy into stocks that haven't yet broken to new highs.

Meanwhile, the longer-term indicator appears to point to the sky and seems to favor holding stocks.

This next ETF looks poised to rally past an important buy point, although there might very well be a period of hesitation before it does.

Here is another ETF poised and ready to rally.

This one looks really good, too.

Greed isn't as high as I would have expected, which means that the market could rise even higher before it starts to falter.

Outlook Summary

• The short-term trend is up for stock prices as of Nov. 5.
• The ECRI Weekly Leading Index points to economic recovery as of July 2023.
• The medium-term trend is up for Treasury bond prices as of Feb. 1 (yields down, prices up).

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