The Short-Term Trend

Uh-oh. Was I too quick calling for a new short-term downtrend yesterday?

This is not the look of an index in a short-term downtrend.

On the other hand, this is the look of an index in a short-term downtrend, and the downtrend looks to have started five days ago, and not just yesterday.

The tiny breakdown of the SPX below support looked like the signal that a downtrend had started, but the bounce back today makes it look like yesterday's weakness was a one day event.

Here is a look at the PMO Index which has now reversed.

For now, I am going to label the short-term trend as "not sure".

The Medium-Term Trend

The medium-term continues to look healthy, although I remain a little suspicious about this rally. My guess is that there will be an early summer peak, and then the market will struggle into the November elections.

The Dow Theory charts are pointing higher. I like this old fashioned look at the market.

What do you think of this chart? Participation is below where it was last year.

So does that mean that the market has plenty of room to rally higher as participation increases?Or does it mean that there aren't enough stocks contributing to the rally in order for it to have the strength to reach up into new highs?

Outlook Summary:

The long-term outlook is cautious.
The medium-term trend is up as of May-10. 
The short-term trend is not sure as of May-30.

The medium-term trend for bond prices is up as May-29.

Investing Themes:

Software

Medical Products

Cyber Security

Payment Processors

Small and Micro Caps

Strategy:

• Buy large cap stocks and ETFs at lows of the medium or short-term trend.
• Buy small cap growth stocks on break outs to new highs during the early stages of short-term up trends.
• Stop buying when the short-term trend is at the top of the range.
• Take partial profits when the uptrend starts to struggle at the highs.
• Never invest based on personal politics.
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