Nice market today! Things are definitely looking a lot better than last week. I don't think we can declare a new uptrend quite yet though because the new 52-week lows are still a bit too elevated.

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In addition, the bullish percents continued to drift lower today, although sometimes these indicators don't turn as quickly as the others. Still, this isn't the look of an uptrend yet.

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Maybe we'll continue to get these dramatic, headline-driven moves up and down in the market until this trading pattern shown below is broken.

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US Dollar weakness continues.

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International bond ETFs are breaking to new highs.

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US Treasury Bonds may be ready to trend higher. For how long, I am not sure. Sentiment has been overwhelmingly negative towards US Treasuries, so a rally here makes sense from a contrarian view.

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I like the looks of this ETF.

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Sector Strength

Stick with the areas of market showing the best relative strength which includes Technology, Defense, Banks, Brokers and Emerging Markets.

I continue to be surprised by the strength of Consumer Discretionary, and I am not sure about the Copper Miners.

It is tempting to buy some of the laggards, but I rarely do well buying groups that are performing poorly. I usually get discouraged and sell before they have time to start to perform.

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Outlook Summary:

I am expecting a choppy, headline-driven, sideways market between now and the November elections. I still plan to buy the dips for short-term gain, but over time I plan to continue to reduce my overall exposure to stocks.

The expected US economic growth rate is back down to the 2% level.

Higher rates are now a headwind for US stocks. The recent tax cut, the 300 billion spending increase, and the already out-of-control federal deficit are a set up for a very dangerous spike in interest rates.

Something else to consider is the Mueller investigation. I worry that the headlines generated by the investigation may rattle the markets more than people are currently anticipating.

Based on market seasonality, Mike Burk is projecting a medium-term stock market peak in May which sounds about right to me.

• The long-term outlook is increasingly cautious.
• The medium-term trend is down.
• The short-term trend is down. 

Outlook from Bob Doll, Nuveen  

Stocks are in a sideways holding pattern

Rising rates and protectionism are headwinds

Low risk of recession or bear market this year

White House and mid-term elections present political risks

2018 could be mirror image of 2016

Investing Themes:

• Technology
• Banks and Brokers
• Payment Processors
• Gamers
• Defense
• Emerging Markets

Strategy:

My accounts are now about 60% stocks. The remainder is cash and bond funds. New purchases are on hold at least until the short-term trend corrects down to the bottom of its range.

Buy large cap stocks and ETFs on pullbacks of the medium-term trend.

Buy small cap growth stocks on break outs to new highs during 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.