Image source: Pixabay

The SPX has regained its former uptrend line, and now it is challenging the former highs. Additionally, this is occurring while the level of new 52-week lows has remained at harmless levels.

The mid-October through the mid-November period now looks like a healthy pullback in prices that formed the left side of a new base, while the more recent price action since then has formed the right side of the base. It has a healthy look, but at the same time, it doesn't seem like the market is ready to race higher without more sideways, base-building action.

This chart appears bullish, but I have concerns about this current market environment that I will discuss.
 

As I've often mentioned, I don't believe that the market can move consistently higher without leadership from the two ETFs shown below. The semiconductor index is looking really good, having climbed convincingly to the level of its October highs. The technology ETF has lagged, but it doesn't look too bad, and it may need time to work its way upwards.
 

The PMO index pushed all the way to the top of its range last week, which is bullish action, particularly considering that it hasn't done this since last July. That is a long time for a short-term indicator to be showing weakness.

On Friday, the PMO ticked lower off its highs. This might be a warning of a bit of market weakness, or just the result of the indicator moving to the highs too quickly and needing a pause. I am not making too much of the PMO downtick, but I am taking seriously the fact that with the PMO at the top of its range, the time to be an aggressive buyer of stocks in the short-term has passed.
 

The bullish percents have moved higher in a strong upward fashion for two weeks. There isn't much in the way of weakness showing here, confirming that the current short-term uptrend is intact.
 

The summations are also confirming the uptrend.
 

Here is a better look at the new lows. Both exchanges appear decent.
 

One thing that is difficult to show in charts is the performance of my own trading accounts. I was stopped out of positions quite consistently over this past week, and now I am down to 50% cash. I think these forced sales were the result of the sector rotation being experienced in the market, out of technology and industrials, and into other areas. I view this as moderately bearish for the longer-term trend because it strikes me as late bull market behavior.

Bottom line: The short-term trend looks good as long as you are holding positions in the areas of the market that are outperforming.

Meanwhile, Treasury yields have the folks at CNBC concerned. If all I had to go by was the chart below, then I would say that it is way too early to be concerned about yields. But I've been watching the trend in commodity prices via the DBC ETF, and since that ETF has recently ticked into levels of new 52-week highs, the reaction of higher yields makes perfect sense.

This is definitely something that is concerning regarding the health of the broader stock market. In fact, the downtick shown in the PMO index could be the result of the Friday uptick in Treasury yields.

The new highs for the DBC commodity ETF and the move higher in Treasury yields could easily give the Federal Reserve a very good reason to refrain from lowering rates. This is a red flag for the longer-term trend of the market. This is an indicator to take caution.
 

Here is the chart of the DBC ETF, which is just barely moving into the new 52-week high territory.
 

I know absolutely nothing about Bitcoin, except to say that it is usually highly correlated to the QQQ. Since November, the two have diverged. I think there is a chance that Bitcoin is providing a warning for Nasdaq stocks.
 

This longer-term market indicator is pointing solidly north.
 

The global stock markets are still showing very healthy advance/declines. This is a bullish indicator.
 

Regional Banks have been doing well lately, and this ETF could be ready to push into new highs. I like the setup, but this strikes me as a long-term purchase, and I'm not ready to add to long-term holdings right now. I can't say that I know all the tickers listed among the top holdings.
 

Outlook Summary

• The short-term trend is up for stock prices as of Nov. 24.
• The medium-term trend is neutral for Treasury bond prices. 

More By This Author:

New All-Time Highs In A Short-Term Uptrend
The Market Struggle Following The Uptrend
The Market Derailed