With the market closed Friday for the Easter Holiday, we have a shortened trading week and abbreviated market report. Since early February, major indices have staged a strong advance. But this week, stocks have generally traded sideways.

The upward trend that has been in place for more than a year remains intact. But any time major indices start to flatten out there is some trepidation. The sideways pattern could continue for several weeks, as it did in November and December, or it could slide into a correction like it did in January. The third possibility is that it could resume its advance.

The chart below shows how three major indices have performed over the past six months. While all three currently have nice gains over that period, it has not been without opposition.

Acquaintances often ask me what direction I think the market is headed. I usually tell them that there are three possibilities: up, down or sideways. The variables that can impact the market are almost limitless. That means predicting what the market will do is impossible.

But forecasting is not the same as predicting. Forecasting market behavior is similar to forecasting weather. Tools and instruments are used to assess the current condition. The assessment is then compared to past periods that seem to exhibit similarities. Using as much data as possible, a best guess is made about what seems likely to occur.

Long-term trends might be the best indicator of near-term market behavior. Even though the current economic recovery is fragile and many economic fundamentals remain weak, for more than a year stocks have staged a strong advance.

At some future point, the momentum will shift and we will see another significant downturn. But with recent gains in employment, improving corporate revenues, rising retail sales numbers, and a president and Congress that have finally notched a win, this is not likely to be the starting point for the next major bear move.

F.S.