The short-term uptrend continues, although the PMO index looks like it is indicating that the market is preparing for the next short-term move to the downside.

The major indexes are still above their 5-day averages, and I wouldn't consider declaring a new downtrend until seeing them close under their 5-day averages.

The 10-day call/put is looking hesitant, similar to the PMO index. A bearish red bar for this index would be a solid indication that the market is ready to trade lower in the short-term.

The bullish percents of the two majors are pointing in different directions, but only in a minor fashion. This chart shows us that the NYSE is doing most of the work in keeping the market ticking higher.

New lows are a bit elevated on the NYSE. Enough to be a warning but not enough to get defensive. The Nasdaq new lows are quite elevated and are a much stronger warning, but then again, we've seen Nasdaq new lows at this level for a while now and yet the market continues to march higher.

The small-caps looked like they might start to trend higher along with the rest of the market, but they just can't seem to get going. If this ETF dips below the 20-day, then I will be tempted to short the index via an inverse fund.

Here is a new chart, or at least I think it is new. I've added a smoothed stochastic to the inverted VIX, hidden the chart of the inverted VIX prices, and displayed the SPX instead. The stochastic has the look of wanting to start to trend lower, which is a decent signal to get cautious.

The 10-year yield started rising sharply after last week's strong jobs report, but on Friday, it reversed just as sharply after meeting downtrend resistance. At the moment, it looks like the strength in Treasuries continues, so I sold my bank stock holdings that had just been added a week ago.

Bottom Line

It is tough to time the peak in the short-term stock market trend, so the best I can do is lighten up when the indicators are struggling near the top of the range, and, as a result, my accounts are mostly cash. The remaining longs have stops in place and I have some short positions via bear 3x funds which also have stops. I'll be shorting the small-caps if they break down below the 20-day with a stop just above the 20-day.

It is time for me to start paying attention to the longer-term economic outlook again, seeing as the ECRI index has come back down off its extreme high. I think I just needed a break from watching this index.

According to the ECRI, the cyclical economic growth rate peaked in the spring of this year just about at the time that the high-PE technology growth stocks also peaked, and the SPX industrial and bank stocks took the lead.

Now according to the ECRI, the cyclical economic growth rate has declined to the point that there is some risk of a significant market pullback in prices. Here is the quote from Laksman Achuthan, ECRI, on Aug. 6:

"The pace of the economic recovery is starting to decelerate. Our work also shows a link between the risk of serious stock market corrections and slowdowns in economic growth."

I should add to this that Laksman stated that he sees no risk of recession at this time.

I'm definitely worried about the risk of a larger price decline for the market. Good money has been made over the past 18 months, and it is important to respect heightened market risk in order to hang onto those gains.

Outlook Summary

• The short-term trend is up for stock prices as of July 23.
• The economy is in expansion as of Sept. 19.
• The medium-term trend is up for treasury bond prices as of June 11 (prices higher, rates lower).