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The short-term uptrend appears set to continue, and this uptrend is now about one-month old. The previous uptrend lasted two months, so if the pattern repeats, there may be more upside to come. Some of the debates between market experts were quite good this week, as everyone has been forced to acknowledge the market's strength in the face of mixed economic reports and upside-down yield curves.

The five-day moving average continues to confirm the uptrend, although the Dow index is slightly below its five-day and also its early January high. The other indexes show volatility but are advancing, and Friday's selling came after huge gains seen on Wednesday and Thursday. After Thursday's advance, the market was probably ready to pull back at least a little bit regardless of the jobs report.

The bullish percents also continue to confirm the uptrend, although they are now above their August highs, which indicates that a bit of caution is needed for new buys.

The NYSE common-stock only summation index continues to rise consistently. A red bar in this index would provide a nice signal to take some profits. If the number of NYC new lows increases while the summation also falters, that would be a signal to get defensive again by taking more than just partial profits. I should note, however, as mentioned in last week's post, that this NYC summation is extended and reaching up to levels that indicate caution.

The SPX buy-write index provides more help when deciding how to handle this market. The uptrend in November was tested when the SPX dipped below the moving average while the BXM stayed above, and it was a signal that the uptrend wasn't over yet.

I like to watch certain levels in the market so I can plan when I will need to get defensive, and at the moment, it looks like the 12,000 level on the NDX is the one to watch. If the index falls below this level, I'll raise cash.

This Europe ETF has been ripping higher since its October low due to the peak and reversal lower of the US dollar, and because the European economy wasn't hit as hard as expected.

Now, the VGK ETF is just under formidable resistance, while we found out on Friday that job growth remains strong in the US. As a result, US rates and yields may be going higher and staying there longer than expected, which could start to push the dollar upward again and thus hurt the VGK. I went short on Friday.

Bottom Line

Like most people, I find it really hard to believe that the bear market is over, but there is no denying that the market and the indicators that I follow are now favoring higher prices.

I don't have a crystal ball and my instinct is to always be skeptical of higher prices, so if I want to make money, I have no choice other than to rely on the market indicators I've been following for so many years. That means, at the moment, my primary trading strategy is to be long stocks, and I've chosen to buy the stocks with a combination of the best fundamentals and the best chart patterns.

As always, regardless of whether it is a bear or bull market, there is a short-term trend present, and I find the best way to make money is to watch the short-term trend closely and therefore raise cash into strength and deploy cash into weakness. It sounds a lot easier than it is, however. There are times when I start selling the peaks too soon, and there are times when I start buying the lows too soon, but over time, it is a really good strategy.

At the moment, I am about 65% long and 15% short. The longs are primarily in the best individual stocks, and the shorts are in the inverse ETFs that hold stocks that are inflation-sensitive or involve foreign markets that look like they are near short-term peaks.

Outlook Summary

• The short-term trend is up for stock prices as of Jan. 6.
• The economy is at risk of recession as of March 2022.
• The medium-term trend appears uncertain for Treasury bond prices as of Feb. 4.

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The Short-Term Uptrend Continues With Large Price Swings
Last Week's Short-Term Uptrend Continues With Surprising Strength