There are many ways to check the breadth, or underlying strength, of major stock indices. The easiest is to look at the advance-decline line of an index in relation to price. Another way is to look at the McClellan Oscillator and the McClellan Summation Index of each index. A third path is to look at the Buying Percent Index (BPI) of each index and see what percent of issues are on point & figure buy signals.

We are lowering out intermediate-term technical outlook to neutral from bullish. This decision is based on several key developments over the past couple of weeks, combined with the fact that the price weakness has not done enough to alleviate excessive optimism. The major indices have all broken intermediate-term trendline support off their secondary lows since April. The Nasdaq and Nasdaq 100 (QQQ) closed below their 50-day average on Thursday for the first time since late February.

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

Our rating on the Industrial sector is Market-Weight. While we see pockets of strength in areas such as trucking, and room for a rebound in aerospace-defense, the sector's exposure to the oil patch and weaker manufacturing volume argue for a market-aligned weighting at this time. The Industrial sector accounts for 7.9% of S&P 500 market capitalization. Over the past five years, the weighting has ranged from 7% to 12%. We think that investors should allocate 7%-9% of their diversified portfolios to the group. The sector includes industries such as transportation, aerospace & defense, heavy machinery and electrical equipment. Here are some of our top picks; all are rated BUY at Argus.

As we have said repeatedly, the major thorn in the side of this stock market is sentiment. Headlines in the financial press scream that a tech-led, everything's awesome rally looks to be unstoppable; that Robinhood traders are cashing in on the market comeback that billionaire investors missed; and that dumb money is looking very smart. Note that many of the references are about small investors.