A blowoff top, or a rally up the wall of worry?

Monday: Sector Strength

Leadership from small caps, transports, semi-conductors, financials, emerging markets. It all points to a growing economy, moderate inflation, and a healthy bull market.

Don't try and second guess the leadership or try to out-smart the market. Stick with the best performing areas.

The Short-Term Trend

Participation in the rally is headed in the right direction again. Below is the Nasdaq bullish percent.

Below is the SPX bullish percent.

Below is the PMO index and the S&P-1500.

Follow Up

The long-term outlook is positive. 
The medium-term trend is up.
The short-term trend is up.

 

• Bullish sentiment is red hot. It signals caution.
• The market is past the point where risk-reward favors the buyers. 
• The ValueLine market outlook is cautious.

Materials fell last week, but have now popped back up along with Emerging Markets.