Defying gravity, U.S. stocks held onto the recent big gains of the prior week. There hasn’t been much of a pullback to get long into, so I remain in cash.

We had an interesting day as the Dow transports made a new cycle high. The industrials have yet to follow, so there is a slim chance that Dow theory could still give a sell signal. I’m not betting on it at the moment though.

I am very confused by the action of the drillers. Energy sector stocks should be leading the way, yet they are being left in the dust by all comers including the lowly financials. The poor performance of DIG and OIH is a troubling aspect of recent market action.

I am still not ready to kick Dick Arms’ recent bearishness to the curb. If the stock market had a serious breakdown in January like Arms suggests, then the recent straight up, low-volume price action of stocks makes a lot of sense. That’s what I would expect to see right before a change of trend.

I’m going to give the market another couple of weeks before making a decision on the intermediate trend.