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At the close today the Standard & Poor’s 500 was up 1.06%; the NASDAQ Composite had gained 1.77%; and the small cap Russell 2000 finished ahead 0.64%.

Those gains put a stop to a string of three straight days of declines.

But today’s upside move wasn’t enough to reverse what looks like a downward trend in stocks.

To see what I mean go to the charts and look at the pattern of lower highs put in by many of the major indexes in the last few months.

The S&P 500 shows what is the most positive chart among the major indexes. But even this index is in what I’d call “contested territory” right now.

The S&P 500 closed at 4159.12 today. That’s below the high of 4232,60 set at the May 7 close and below the 2–day moving average at 4166.06. With the 50-day moving average at 4081.26, the S&P 500 looks to have decent near-term support but to start a new uptrend the index needs to move above the May 7 high. What I’d like to see here that would convince me of an uptrend that might last for a few weeks instead of a few sessions would by a higher high.

As I said, the S&P 500 is the most positive of the major indexes.

The NASDAQ Composite, to take another example, doesn’t look nearly as close to starting a positive trend. The index closed today, May 20, at 13,535.74, up 1.77%. That’s a very strong one-day move to the upside. But the index put in a May 7 high of 13,752.24, more than 200 points higher than today’s close. And before that an April 26 high of 14,138.78. In other words the index still has a lot of work to do to make the higher highs that would be a convincing sign of an upward trend. And the greater likelihood is the danger that the index will fail to move above the May 7 high at 13,752.24 and will instead test and then fail at the May 14 high of 13,429.98.

The chart of the small cap Russell 2000 index looks even iffier. Today the Russell 2000 closed up 0.64% to 2,207.76. But that’s below the May 17 high of 2,227.12, and blow the April 28 high of 2,266.45, and below the March 15 high of 2,360.17. What I see in the current chart of the Russell 2000 is a very strong pattern of lower highs. And that’s usually not a good sign for an index or stocks in general.

There’s a strong possibility that today’s bounce in stocks had nothing to do with a change in sentiment. The market may still be harboring the same fears of rising inflation and a soon-than-expected increase in interest rates. Instead today’s bounce may be an artifact of computerized buying set off by algorithms that found a profitable trade in markets that had fallen too far too fast.

Tomorrow’s moves will help clarify the trend for stocks.