Stock markets have largely been trading sideways since June, driven by economic, earnings, and interest-rate uncertainties. Some of the technical indicators I look at are showing caution in the near term. The new-high/new-low (NHNL) ratio, a measure of the number of stocks touching a new 52-week high versus the number of stocks that have declined to new 52-week lows, continues to be weak on both the NASDAQ and NYSE.

 The NHNL on the NYSE is weak, with the last 42 straight sessions below the 70% reading before a bullish 77.49% reading on September 19. However, this was followed by five straight sessions below 70%. A reading below 70% is a red flag of soft sentiment. The reality is that we need to see bullish sentiment to support any rally.

 In the technology sector, the NHNL on the NASDAQ is also weak, with 44 straight sessions below the 70% reading prior to two 70%- plus readings on September 19 and 21, although the last three sessions were below 70%.

 Breadth on the NASDAQ as indicated by the advance-decline line (A/D) is mixed, with six of the last 10 sessions above 1.0, as the near-term trend is sideways.

 Another technical indicator, the CBOE Volatility Index -- a barometer of near-term market volatility -- is generally viewed as a contrarian indicator.

 The five-day CBOE NASDAQ Volatility Index (VXN) to September 25 fell to 21.36 from 26.89 the previous week, but remains above the 200-day MA of 18.77. The declining VXN may indicate a near-term top in the NASDAQ. In the broader market, the five-day CBOE S&P 500 Volatility Index (VIX) fell to 19.49 versus 24.29 the previous week. It was also below the 50-day market average (MA) and 20-day MA of 23.03 and 24.25, respectively. Higher readings may indicate a near-term top.

 As we move forward, I expect to see some selling pressure as stocks rally. But watch for an overbought technical condition at this time.