Pay Attention - Divergence

Things just got interesting on the daily charts. The Transportations hit new all time highs, but so far the industrials aren't continuing to confirm (as of July 7, 2017).

This type of divergent move is what I am looking for as a signal to start thinking about taking profits.

But not immediately. There isn't enough data to fully support a thesis of a change in primary trend. For now, it's a hypothesis. So ... I'll need to 'hurry up and wait' to see if something big materializes. For this strategy, I will look to the weekly charts. FYI, the weekly charts are currently painting a much more rosy picture than the daily charts ...

What I'm wanting to see (well, I don't *desire* to see this, but if I do see it I'll be ready) is something like this: hundreds of points of sell off or more in the industrials and the transportations. On the way back up, the transportations make a new all time high and the industrials fail to confirm, or both fail to make new all time highs.

If this happens more than once say, in the next month or two, I'll be taking profits on just about every position in my portfolio. But if both indexes surge to new all time highs, I will not do anything at all and continue to reap the rewards of this impossibly resilient bull market.

Bear market likelihood

As of right now, the likelyhood of a full fledged bear market in US equities is minimal.

Manufacturing going forward looks healthy in the US and China, and consumer confidence is high in the US. The Energy sector is also rebounding from a terrible bear market. Overall, there is a big sigh of relief happening across the developed world as fiscal policy and government decisions are increasingly leaning toward economic expansion and deregulation.

What I do expect is some healthy corrections to keep everyone honest. I am 100% long equities, and have been since last year when I restarted the blog. I see no reason to change course now, and dow theory is confirming this idea.

Keep on keeping on is the mantra for now. I am also perfectly fine with putting new money into the stock markets now.