It continues to be a confusing market. Last Monday there was a powerful rally, but then Thursday saw an awful session. I'm really not certain if the market is in a new short-term uptrend, and that is partly because the PMO index hasn't followed through to the upside. So we may still be in the downtrend that started in early January.

Starting with the Monday rally, the major indexes had been trending nicely above their 5-day averages in a convincing fashion. But they ran out of steam quickly, and all three are now below their 5-day averages.

The major indexes found resistance at their declining 50-day averages. This is what you would expect after a market correction. This leaves us with the obvious question, is the Friday through Wednesday rally an oversold bounce, or is the correction bottoming out and a larger uptrend is beginning?

We must wait and watch to see if the indexes move above these averages, and we should assume the correction will continue until the indexes trade above.

The bullish percents certainly looked like they were indicating that a new uptrend began on Monday, Jan. 31, although now they are hesitating a bit. A minor stall in the trend isn't worrisome, but the NDX bullish percent is already at the same level it was when the previous rally peaked in late December.

So, there probably isn't much more upside for the NDX bullish percent, and this is not where you want the bullish percent to be near the beginning of a short-term trend.

The small-caps haven't moved much and there is so much room for this index to fall from here. It is hard to look at this chart and see an index that is about to rally.

The SPX equal-weight doesn't look too bad, at least based on this chart. January started with a higher high and ended with a lower low, which isn't a good pattern, but it found support where you would expect it. Based on this chart's momentum indicator, it seems as though a new short-term uptrend began late January and it has room to continue until the indicator tops out.

Here is a broader look at the same index. From this point of view, we see our two options based on the moving averages. If the index rises above the 50-day, we maintain a high exposure to stocks, and if it dips below the 200-day, we step aside and keep the accounts mostly in check.

Here is a look at junk bonds, which are pointing decisively lower. In general, it is a good idea to invest in the direction of junk bonds, and they are telling us to be sellers at the moment.

This chart reveals how shaky the backdrop is for stocks at the moment with a very bearish price pattern. The ETF failed to make a new high in November, then a lower low. This is followed by a higher high in December that collapsed in January, and it is still unclear if it will find support.

Outlook Summary

• The short-term trend is uncertain for stock prices as of Feb. 5.
• The economy is in expansion as of Sept. 19, 2020.
• The medium-term trend is down for treasury bond prices as of Jan. 3 (prices down, yields up).