Stocks haven't gone much of anywhere since June. Where they go next could matter a lot.
July 28, 2003: 5:58 PM EDT
By Justin Lahart, CNN/Money Senior Writer
NEW YORK (CNN/Money) - Lately it seems like the stock market's get up and go got up and went.
The market hasn't been bad, exactly, it's just that it hasn't done much of anything at all. After rampaging higher through the spring, stocks are stuck. The S&P 500 has been tarrying near the 1000 level ever since June, breaching it for a few days and then falling right through.
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"Face it, the market really hasn't made much progress," said Larry Rice, vice president at Janney Montgomery Scott. "Maybe it's telling you to err on the side of caution."
At the very least, it's telling you that investors are finding few fresh incentives to buy.
Chart-watching types would say that the market is running into heavy resistance near the 1000-level on the S&P -- which is a shorthand way of saying 1000 is a place a lot of players have decided is a fine place to sell. Conversely, the S&P hasn't closed below 974 since June 3, meaning that the markets bouts of selling haven't lasted very long at all before buyers come in. Neither the bulls nor the bears appear to have an upper hand.
"The things we look at most closely are buying power and selling pressure," said Lowry Reports technical analyst Richard Dickson. "There's been no change in that stuff. We're sitting here going, 'well, whatever'."
Dickson has been advising clients to use market rallies, such as they are, to weed out weak positions while using selloffs to build positions in stronger stocks -- which is tantamount to telling them not to do much of anything at all.
Ride a painted pony
Dickson is hardly alone among those who think this isn't the time to make big sells or buys: Watch and wait is the something of a mantra on Wall Street lately.
Fundamentally, everybody is fairly certain that the economy is going to improve in the second half of the year, but they're unsure of how strong the recovery will be and whether it will be able to sustain itself. And even if the economy does do well, they don't know whether earnings will be strong enough to justify current, steep-looking, stock valuations.
Technical analysts are also mindful of the problems that the market often runs up against in the fall. Miller Tabak chief technical analyst Philip Roth, for example, thinks there's a good chance at least some of the major indexes could hit new highs in the weeks to come, but that things could get dangerous following that.
"I think the biggest correction of the year comes between the late summer highs and the fall lows," he said. He reckons the market could be due for a 10 to 15 percent hair cut when that drop comes.
But technical analysts are also entertaining the possibility that the usual trouble the market runs into in the fall might not come this year.
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That, they say, would suggest that a new bull market had, in fact, begun, and that stocks could continue to run higher through to the end of this year and into next. The key thing, said Bollinger Capital Markets president John Bollinger, will be how stocks perform in the month to come.
"A flattish August will have me out of the market by the end of the month," he said. "A strong August will have me adding to positions."
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