Image Source: The short-term uptrend looks set to continue. However, despite Friday’s very strong session, there are issues with this trend.First, let’s take a look at the positives for the market. Friday’s strong market was a surprise to me after a weak Thursday session. A major plus for the bulls showed up in the chart with a break above its downtrend line. This is a bullish indicator.All three of the major averages are cooperating nicely, with convincing moves above their 50-day lines. This is definitely a bullish-looking chart.The junk bond ETF is maintaining the uptrend, and it continues to favor owning stocks.Now, let’s take a look at the market negatives. Even though the major indexes are doing well, market breadth and stock participation are not convincing. These two bullish percents are moving sideways, meaning that few stocks are generating new price chart buy signals. It is a sign that large-cap stocks are doing all the work to push the major indexes higher.There are way too many new 52-week lows occurring during a short-term uptrend cycle. Uptrends are not healthy if they occur while new lows are elevated and rising. There were a lot of new lows on Thursday and Friday. This is a bearish indicator.I’m worried about this market particularly because of the elevated number of new 52-week lows. I’ve stopped adding to holdings, and I’m inclined to start raising some cash by taking partial profits next week.However, I also need an indicator to be a line in the sand that, if crossed, will quickly get me out of stock positions and into cash. I think this chart of the summation indexes is a good candidate. If any of these summations cross under their moving average, then I’m a strong seller.
Bottom Line
The indexes are doing well, and I’ll own stocks as they as they continue to do well. But I’ll be out quickly if they falter. The Nasdaq 100 showed a really bullish break out from the flag pattern.Technology is the undisputed leader of this market.
Outlook Summary
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