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The market is still in a short-term uptrend, and nothing seems to be able to knock it off course. So, I'm not going to show you the same old charts this week and make the same old comments. Let's look at some new charts.

The chart below is a look at the SPX and the NYSE Summation Index. The chart shows the SPX above its 50-day, and it shows that the 50-day is starting to curl upwards. That's bullish behavior, but then you see the index is still well below the 200-day and stalling a bit under resistance.

That means we are still in bear territory, and it reminds us of what we all know so well; that bear markets have deceivingly strong rallies designed to draw us in and take away our money. The SPX chart looks like a 'no man's land' to me, and I think this is where we have no choice other than to wait to see what the market does next before making any new trades.

The middle panel of the chart shows the on-balance volume of the SPX, and it has remained at low levels despite the recent rally. This means that the indicator is not confirming the move higher in prices, and it hints that the market probably doesn't have the bullish volume it needs to break into a new longer-term uptrend. Not yet anyway.

The NYSE summation index in the bottom panel shows promise. There was a very nice bullish divergence between the May low of the indicator and the June low, which was an early sign that we were going to get this strong summer rally. Now, this indicator has been catapulted into the blue and near the November high, and I think that while the summation is in the blue, you have to be open to the possibility of bullish market outcomes.

Here is a really basic look at the SPX. I have been using this chart style with a simple uptrend line and horizontal support on a number of different indexes, looking for a simple sell signal.

If you look at the June peak in this chart, there were eight days of sideways action, and then the bottom fell out. I'm wondering if we are going to get similar price action this coming week. I'm looking for a decisive down day, with the closing price under the trend lines and a close at the lows of the day.

I'm still a market bear looking for that next big leg down, but I'm trying to acknowledge my own negative bias and be prepared to be wrong. I think that this chart below is my biggest risk as a bear.

For years I have been saying that it is the price of oil that controls the actions of the Fed, and I still believe that. So, with this week's breakdown in oil prices, the pressure to raise rates has diminished.

Of course, it has only been a couple days and we need more time, but if the price of oil remains in this downtrend and below this important technical price level, the market may soon no longer have the Fed as a headwind. Simply put, this chart favors higher stock prices.

Outlets like CNBC have been constantly talking about the importance of Apple as a market leader, and they are right about it, so I'm not sure why I haven't included it in my mix of market indicators in the past.

What a great rally off the June low, and it blew right past the early June high without any notice. With oil prices behaving, and tech stocks being led higher by Apple, you have to give points to the bulls. I will point out that there was an early-June peak in oil prices and then a mid-June low in the price of Apple.

If lower oil prices are good for US stocks, then the same is certainly true for European stocks. With all the bad news in Europe, it is hard to imagine seeing their stocks do well, but we have to be open to the possibility.

At the moment, there is nothing in the chart shown below that tells me that this ETF (priced in US dollars) is headed higher. But I will be watching this ETF next week to see if it breaks above this downtrend line. If it does break higher and maintains the strength, then the bulls will get some big points. In the meantime, I remain a Europe stock market bear and I'm short via an inverse ETF.

Here is another look at the SPX, but this time we are looking at it along with the NDX. Both indexes are just under their 30-week averages, which is an important line in the sand. It wouldn't mean much to see the averages briefly trade above their 30-week lines, but if they trade above and hold, then I will have to discard a lot of my market skepticism.

This is a look at the same chart style but applied to the small-caps. This index is challenging the 30-week too, but it remains below the June high and is facing huge overhead resistance.

I should note that the early stages of a bull market are usually led by the small-caps. Based on this chart, I am doubtful that the small-caps could be leaders. This chart looks really bearish to me. It shows a rally within a larger downtrend.

The strength of the US dollar has been helping to push down the price of oil and other commodities in the US and to fight US inflation. The dollar tested its trend line early in the week, and now it looks like it has bounced higher off that trend line, confirming the uptrend. 

I think what we want to see is for the dollar to level off and trend sideways. If the dollar gets too strong, then it hurts foreign markets too much, but if it gets too weak, then we may see commodity prices rising again. Also, if the dollar levels off, it will be a sign that we are probably near the peak in short-term yields.

Longer-term Treasury yields peaked in June and are now below their 50-day averages, which is consistent with the drop seen in commodity prices. Similar to the dollar, the best outcome would be for longer-term yields to remain above the recent lows, but below the June highs. I'll leave it at that.

This is the chart that has me the most bearish towards equities. The ECRI leading index is at a very low level, and the ECRI institute has stated that they are expecting a recession.

Bottom line: I'm on the fence. The strongest factor in favor of the bulls is the dramatic drop in oil prices. On the other hand, the ECRI is indicating a very weak economy in the months ahead, which favors the bears. I'm short European stocks and small-caps via inverse ETFs, and I also have several small long holdings of quality stocks that have gone way down in price this year.

I posted this chart to Twitter recently. It is an hourly chart that shows the TLT with a clean sell signal (higher yield, lower price). But there was a question about how to read point&figure charts, so I have included this link.

Point & Figure was a very popular way of charting before computers (although they used a traditional method and this chart uses the average true price range). The x's indicate prices moving up, and the zeroes are prices moving down. The method filters out the noise of minor price changes so that you can clearly see the bigger price moves which reveal well-defined buy and sell signals. 

Outlook Summary

• The short-term trend is up for stock prices as of June 24.
• The economy is at risk of recession as of March 2022.
• The medium-term trend is up for treasury bond prices as of July 22 (yields lower, prices higher).

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The Short-Term Uptrend Continues After Upside Acceleration
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