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Last week, the bellwether S&P 500 essentially drifted sideways as it negotiated its 1,851 Jan. 15 all-time high from below but failed to establish a new one, closing down 0.13% for the week.

Weak manufacturing and housing data weighed on the market, and the January Federal Open Market Committee minutes didn't help matters by indicating almost certain tapering this year in bond purchases.

#-ad_banner-#The tech-laden Nasdaq 100 (-0.03%) and blue-chip Dow industrials (-0.32%) also closed lower for the week, with only the small-cap Russell 2000, eking out a small gain of 1.34%. Year-to-date, the major U.S. indices are mixed with the Nasdaq 100 up 1.97% and Russell 2000 up 0.1%, but the S&P 500 down 0.7% and Dow off 2.9%.

Improving Momentum in S&P 500, but Other Indices Must Confirm
Last week, I pointed out that the Moving Average Convergence/Divergence (MACD) indicator, which plots the difference between a 12-day and a 26-day exponential moving average, was indicating a near-term decision point for the S&P 500, from which its late January decline should resume if still intact.


The green circle in the right lower edge of the chart below, an updated version of last week's chart, shows that MACD rose back above its zero line last week. This indicates that the S&P 500's larger bullish trend has resumed, just as it did following the previous two minor corrective declines in June-July and August-September (red vertical highlights).



However, the market isn't quite out of the woods yet. One potential problem is that, while the Nasdaq 100 recently set a new 2014 high by rising above its 3,635 Jan. 22 high, the bellwether Dow industrials have thus far failed to exceed its corresponding Dec. 31 benchmark high at 16,588. The Russell 2000 and Dow transports have also failed to set fresh new highs.



If the U.S. stock market is indeed beginning a new leg higher within its larger 2013 bullish trend, as suggested by our first chart, all major U.S. indices should confirm this via fresh new highs. As long as one or more of these indices fail to do so, the validity and sustainability of the advance will be suspect.

More Strength Coming in Gold?
Last week, I said gold futures were edging above their 200-day moving average for the first time in a year, and stated that at the least this represented a major inflection point for gold prices and could indicate an emerging major bullish trend change.


The next chart plots Barrick Gold (NYSE: ABX) daily since July 2012, which is positively correlated to gold prices.



The chart shows that ABX has been a little stronger than the gold contract of late, trading above its 200-day moving average since mid-January. Also significant is that ABX's 50-day moving average (minor trend proxy) is now crossing above the 200-day from below, which indicates that a positive intermediate-term momentum change is emerging.

A sustained rise above the $21.20 August 2013 high, which is currently being tested from below, would confirm a base in prices at the multiple 2013 lows and clear the way for an eventual rise to $31 per share, which is the July 2012 low and represents a gain of more than 45% from current levels.

This article originally appeared on ProfitableTrading.com:
Market Outlook: Stocks Not Out of the Woods Till This Happens

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