We are supposed to be in a downtrend (or a consolidation) as of a week ago Friday, but the recent market strength makes the weakness late last week look like just a dip.

However, based on this PMO chart below, the majority of stocks are correcting while the big institutional stocks continue to hang in there and move higher.

On Tuesday the market was back above the 5-day, and by Thursday it was hitting new highs again. So, if you are looking for a pullback like I am, then you have to wait some more. A break below this trendline would be a nice start.

Another thing to consider is that this short-term uptrend started almost two months ago. That is a long time for a short-term trend.

This chart shows a lot of new 52-week lows. In the past, so many new lows would have me very worried. But this year the market has continued to push higher despite elevated levels of new lows.

Price momentum has peaked which could be a set up for some market consolidation.

Because my favorite indicator, the number of new 52-week lows, hasn't been working as well for me this year, I have been trying to learn to count distribution days as taught by Investors.com.

At the moment there are four days of distribution on the SPX and four on the NASDAQ. (I think I would have also counted July-17 as distribution with such a weak close at the day's low.)

From what I read in their Big Picture column, this is enough distribution to start watching for the next period of market selling. Also, they noted that Friday's strong market was a fairly low volume day.

They also mention that on the bullish side, the distribution is spread out over four weeks which minimizes the impact. Distribution is a stronger warning when it is clustered in a shorter and more recent timeframe. And one last bullish thing, they mention that none of these are strong distribution days with large jumps of volume on the down days.

We'll probably see a correction soon although I can't blame you if you are convinced that this market will never go down again.
 

Outlook Summary

The long-term outlook is cautious as of May-18. 

The medium-term trend is up as of Jun-07. 
The short-term trend is down as of Jul-19.
The medium-term trend for bond prices is up as of Nov-16 (prices higher yields lower).   On watch for the next downtrend.

Investing Themes:

Treasuries, Cash
Top-Rated Stocks in Uptrends.

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.
• The cardinal rule is never invest based on personal politics. The stock market can do well regardless of which political party is in control.