I am sticking with my call of a short-term downtrend, and that there are signs that the medium-term is near a peak.
I know it is a bit strange to see new highs in the major indexes, and at the same time call it a downtrend. And substituting the word “downtrend” with the word “consolidation” doesn’t work either considering the strength of the recent surge in the NDX and XII.
The reason I think it is a downtrend is because the majority of stocks are struggling as shown by the chart below. I do better when I step aside a bit and raise cash when the general market is struggling, and I think it is pretty rare for the NDX to surge while the Nasdaq bullish percent is pointing lower.
Regarding the medium-term trend, all ten of the Summation Indexes published by Stockcharts.com are now pointed lower, and I find that these indexes start to move lower in advance of the peak in the medium-term trend. So I think it means that the indexes are hinting at a medium-term peak, but we need to monitor the price indexes such as SPX to see when the peak actually occurs.
I only started seriously monitoring the medium-term trend in the last couple years.My strategy when we are on the downside of these trends has been to stay away from leveraged ETFs and to have cash. I want the cash so that I have money to invest near the lows of the trend because these seem to be really good times to buy.
I think that is worth repeating. The lows of the medium-term trends have been good opportunities for purchases, and I will add that they have been particularly good when the turn upwards develops near the zero-level. I feel like adding a warning to this as well. Something like “past patterns are not guaranteed to occur in the future”.
The Short-Term Leader List
The strongest ETFs are blue, the additional leaders are green and the weakest are red. The S&P500 is the benchmark.
