Image Source: Unsplash

I don't know how to label the short-term trend at the moment. Certainly, technology stocks are trending higher, but I don't see an uptrend or downtrend for the rest of the market.

The NYSE common-stock-only Summation Index continues to point lower, and I don't want to buy stocks while this chart is showing a downtrend. 

Maybe if I were a more nimble short-term trader I could have seen that semiconductors stocks were ready to break dramatically higher despite the weakness in the larger market. But I'm not nimble, and I'm too attached to my own trading strategy to adjust. So, I'm going to stick with my plan and wait to buy stocks when this indicator starts to show white candles, which would mean that the odds are more favorable for higher prices.

The SPX has been cycling sideways for a while with a couple of strong days that are followed by selling which is then followed by buying, etc. Now the SPX has the look of an index ready to break higher on decent volume, but I'm not a believer, and the main reason I don't believe in this market is shown in the next chart. 

There are a lot of new 52-week lows and these new lows are coming on both exchanges, and they even occur on days when the market rallies. I don't like it. I think it shows a significant level of underlying weakness in the market.

Bottom Line

I don't have much more to say about the market's current short-term cycle because I don't know where it is headed. We are in a rare period where the major indexes are out-of-sync with each other, so there is no clear market direction.

So, I am basically on the sidelines. I was forced to sell my Treasuries, and I have no short positions. All that is left are a number of small long positions in my favorite stocks that I add to periodically. I'll keep my cash on the sidelines until I have a better feel for where the market is headed.

Outlook Summary

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

More By This Author: