Caution ahead as stock participation gets narrower and narrower

After the last post, the stock market had several up and down moves each lasting over a week. The last low at early July the stock market got near but not at medium term oversold. This resulted in a week long rally before pulling back about 1% for the SP500 this week. But broad stock participation has gotten narrower and narrower on each leg higher as the indexes are being pulled up by the big cap stocks. On a medium term time frame this usually result a +5% correction. Just when the correct will occur is unsure as the narrow stock market rally led by the major indexes could continue on for weeks or months. For the time being if one is still participating in the stock market , it's better to lightening up on small or individual stocks and concentrate on the major index ETFs. On the chart illustrated below, looking for the SP500 to hold at the black line support level to remain bullish. A break below the support line should result in more downside for the short term.