It isn’t much of a short-term uptrend. But the 50-day is upward sloping, and the 5-day is still above the 50-day. It’s really just a sideways consolation with a slight upward bias.
The number of new 52-week lows is still at a reasonable level. The bullish percents are still ticking higher, although just barely, and the PMO index is still at the top of the range and hasn’t turned lower. These indicators all favor the short-term uptrend at the moment.
In Mike Burk’s Saturday column, he makes this statement, “Seasonally a significant top usually occurs between late April and early May during the 2nd year of the Presidential Cycle.” That sounds about right to me.
In Friday’s blog I briefly reviewed market sentiment. I think the sentiment indicators will be important this year.
The Longer-Term Outlook
One way to know where short-term rates are headed is by watching what is happening with the regional banks ETF. This ETF continues to point higher which is an indication that we remain on track for higher short-term rates this year. Higher short-term rates generally indicate economic growth.
The stock market leaders are the semiconductors, and this semiconductor ETF continues to point higher. As long as this chart points higher, it favors stock prices for the entire market.
I like this chart. It is a good line in the sand. A monthly close under this moving average simply means something is negative for the general market. Also, a close below the prior month low is a negative signal, particularly if the close is below the moving average.
Here is a look at the yield curve. Anytime that short-term yields exceed longer-term yields, it is time to get very cautious regarding stocks. Some people think that the current bull market is in the clear until we get this inversion again.
With such unprecedented levels of federal debt, I wonder whether we really know how this will play out, and what the yield curve will look like when doubts start to crept in regarding the safety of US bonds.