The market still cannot find a direction. I am skeptical of the long term bull market trend. The Shiller PE ratio is still sitting at all time highs. It is certainly not a timing indicator, but it is still a problem. For the time being, the market still sits in a range.
The Rolling 52-week NHNL has also proving to be stubborn. IF the rally does not broaden back out, this bull market is over.
Most of the market is still sitting on monthly lows or worse and, even though we are at all time highs, it is being driven by AI stocks. Not much different than the rest of the past year to be honest.
In the short term, it seems more likely that we will have another move upward, but I don’t now how much further it will go. If the market keeps moving higher with such a low breadth, it won’t take very long for the whole market to turn bearish. At some point, we will have a reckoning of the AI bubble. It is probably not in the near term, but it very well could be in the next few months depending on how this bull market behaves.
The breadth indicator does appear to be bottoming and is in the area where the uptrend will resume.
In my own trading, I took profits and am mostly out. I have still have a few long trades and am testing my new trading plan of changing strategies based on market conditions. I still don’t have a good shorting strategy that I like.
