The Short-Term Trend

The PMO remains at the top of its range, and the short-term uptrend continues. However, the trend is weak and is probably getting ready to turn lower.

The bullish percents broke below their 5-day averages and are now pointing lower. Based on this chart, it sure looks like a downtrend has started. But I don't think we are quite there yet.

Another negative chart. Junk bonds are pointing lower again after having found resistance at the 20-day and failing to hold the 10-day. This chart supports the downward direction of the bullish percents shown above.

This chart is very negative, and in my view, it is the most important chart. New 52-week lows have ticked up to dangerous levels, and with the PMO index at the top of its range, it is not good to see an excessive number of new lows.

There are still a few charts that need to point towards lower prices before a downtrend begins.

The 10-day Call/Put ratio is still pointing higher although with the look of an index that is getting ready to change its trend to lower.So we wait for the next red candle.

The SPX has a similar look to junk bonds. There is resistance at the 20-day and a big gap down on Wednesday, but there is no follow-through to the downside. If the SPX breaks below the 2450-level, that's when I think we probably have a new short-term downtrend.

The current short-term uptrend has been nicely supported by a declining VIX. However, over at DecisionPoint, Erin Swenlin has pointed out that the VIX may be ready to find support at the lower range of the Bollinger Band. If the VIX steadies at this level, it would work against stock prices.

The Longer-Term Outlook

The US money supply continues to show very strong growth which favors stock prices longer term. Maybe not right now, but eventually.

The ECRI index fell off a cliff. I haven't read their most recent analysis yet, but their tweet says a lot.

The weekly PMO of the SPX would indicate to me that more time is needed before a bottom is found for stock prices.

Sentiment favors the bulls from a contrarian point-of-view.

For the optimists, Larry Williams presented a really good video on his longer-term outlook for the market.

Outlook Summary

The economy is in recession as of Mar-28
The short-term trend is up as of Mar-24  

Contrarian Sentiment favors higher prices as of Feb-07
The medium-term trend for Treasury bonds is up as of Jan-25 (prices higher, yields lower)

Strategy During a Bull Market

• Buy large-cap stocks and ETFs at the lows of the medium or short-term market trends
• Buy small-cap growth-stocks on breaks to new highs in the early stages of market trends
• Reduce buying when the market trend is at the top of the range
• Take partial profits when the market uptrend starts to struggle at the highs

Trader Discipline

• Never invest based on personal politics
• Take pride in sticking to the trading plan
• Don't give in to fear, greed or anger