Sideways Trading and the Danger of Chasing Strength Without Confirmation
- Jul 10
- 8 min read
Updated: Jul 15
In market phases where trends appear uncertain, many traders become vulnerable to one of the most common pitfalls: chasing strength without confirmation. Sideways trading -- when price movements lack clear upward or downward direction -- can be deceptively volatile. On the surface, markets seem stable or even quietly rising, but underneath, the lack of confirmation from structure signals caution. In these moments, it’s not unusual to see one index push higher while others stall or weaken, creating conflicting signals that frustrate even seasoned investors.
This week’s activity across major indices offers a textbook example. While QQQ has shown rising projected cycles, SPY and IWM reflect a very different story -- one of projected weakness and lower highs. The net effect? A choppy, uneven market environment that’s more likely to drift sideways than explode upward. Recognizing these signals, and knowing when to wait for proper alignment, separates disciplined market participants from reactive traders who get caught in false breakouts.
Structure remains our anchor. Sideways movement is often a sign that institutional conviction is absent, and without that, even bullish projections can stall or reverse. This article explores the implications of chasing strength during sideways trading and why confirmation matters more than momentum.
What Sideways Trading Really Means
Sideways trading, also referred to as a consolidation phase, occurs when a market trades within a narrow range, without forming higher highs or lower lows over a defined period. While it might appear uneventful on the surface, it’s often a sign of indecision beneath. Institutional traders may be rotating sectors, taking profits, or simply sitting on their hands. Without fresh leadership or strong participation, upward moves lose steam quickly.
We’ve seen this play out repeatedly. In early June, for example, QQQ had strong projected cycles but failed to convert that momentum into an actual breakout. The reason? Other indices weren’t participating, and internal structure was weakening. That early warning revealed that strength in one index wasn’t enough to shift the broader trend. Traders who ignored that divergence and chased strength likely found themselves stuck in stagnation.
It’s important to understand that not all consolidations are equal. Some signal continuation, others signal exhaustion. Differentiating between the two requires confirmation from cycle structure. When multiple indices align and confirm a projected low, strength is more likely to follow. When they diverge, consolidation tends to persist.
Confirmation: The Missing Ingredient in Many Failed Trades
Chasing strength without confirmation is like trying to drive through fog with your high beams on -- it feels proactive, but it often blinds more than it illuminates. Many traders mistake projected rallies as a green light to enter, even when structure doesn’t support it. What they’re really doing is reacting to partial data, and that almost always leads to suboptimal entries.
In the current setup, projected cycles in QQQ suggest a rally may be forming, but the absence of strength in SPY and IWM creates a fractured picture. Instead of synchronized institutional buying, we’re seeing isolated movement. Without cross-index alignment, any gains are likely to be short-lived. This is not the environment where strength should be chased -- it’s where discipline is tested.
One of the key principles of cycle-based strategy is that timing must align with confirmation. A projected cycle low is only actionable when it’s supported by structure -- like a rising price channel or crossover average confirmation. Without those, it’s just a forecast, not a setup.
Check our post on Cycle Analysis Trading: Why Waiting for the Next Cycle Low Maximizes Profits for more info.
How Divergence Warns Us Early
One of the strengths of tracking multiple indices is the ability to detect divergence early. When QQQ rises but SPY and IWM don’t follow, that’s not just noise -- it’s a clear sign that something is off beneath the surface. Divergence isn’t just a warning; it’s a signal that projected rallies may not hold up. In June, this same pattern played out, with QQQ drifting higher before stalling as other indices lagged. The result was a two-week stretch of sideways movement that caught many off guard.
That’s why our approach never relies on one index or a single point of data. It’s the alignment of signals across timeframes and assets that creates a reliable setup. Divergences are more than a red flag -- they’re often the earliest signs that projected moves may fizzle.
As we track the current setup, we’re seeing that same divergence again. Without Forecast confirmation and cross-index support, a rally in QQQ alone doesn’t justify aggressive positioning. Letting the picture clarify -- waiting for confirmation -- remains the best path.
Check our post on Gold vs. S&P 500: Let Price and Timing Decide, Not Long-Term Bias for more info.
Emotional Traps During Sideways Phases
Sideways trading creates a psychological minefield. Without clear trends, traders begin to question their strategy. FOMO (Fear of Missing Out) takes over when a single index begins to rise -- even if the move isn’t confirmed by broader structure. The urge to act replaces the discipline to wait. But acting during these periods often results in false entries, whipsaws, and discouragement.
This is where cycle-based analysis becomes invaluable. It provides a clear framework for decision-making rooted in confirmation and alignment -- not emotion. When markets are choppy and messages are mixed, the temptation to act without clarity can undo weeks of disciplined patience. Recognizing the emotional pressure of a sideways market helps us sidestep impulsive decisions.
If you’re seeing projected rallies but price channels and structure aren’t confirming, wait. No amount of FOMO justifies trading a non-confirmed move. Short-term volatility may stir emotions, but only confirmed setups offer true opportunity.
Check our post on FOMO Trading vs. Cycle Discipline: What Today’s Rally Really Means for more info.
People Also Ask About Sideways Trading
What causes sideways trading in the stock market?
Sideways trading is often caused by a lack of consensus among institutional investors. When there's uncertainty about future earnings, interest rates, or geopolitical risk, large buyers often take a step back. This leads to decreased volume and price movement confined within a range. Additionally, when short-term cycles are peaking while long-term cycles are still trending higher, the result is usually choppy, non-directional action.
Other times, sideways trading reflects sector rotation, where money flows out of one area and into another, creating a surface-level equilibrium. Regardless of the reason, the absence of a clear trend often signals indecision, and in these periods, traders should look for broader alignment before taking new positions.
How do you know when a sideways market is ending?
The end of a sideways market is typically signaled by confirmation across multiple indicators -- not just price. In cycle-based trading, we look for projected cycle lows or highs to align with breakout price structure or rising price channels. Once this occurs, especially across multiple indices like SPY, QQQ, and IWM, the odds of a trend resumption or reversal increase.
Volume can also provide clues. A breakout from a sideways pattern that’s accompanied by strong volume and supported by broader index alignment typically confirms the move. However, if the breakout lacks volume or structural confirmation, it may just be another false signal.
Is sideways trading a good time to invest?
It depends on your strategy. For long-term investors, sideways trading may offer accumulation opportunities, particularly near the lower bounds of a price channel during a rising long-term cycle. For traders, however, these periods can be frustrating. Lack of movement means fewer breakout opportunities and more chances for false signals.
In our approach, sideways markets are observation periods. They help set up the next strong move, and we wait for structure and timing to confirm that the window is open. Jumping in too early during a consolidation phase often leads to premature entries and limited reward.
Can you make money in a sideways market?
Yes, but it requires a different mindset and strategy. Range-bound trading involves buying near support and selling near resistance -- but only when structure supports the move. Without confirmation, these trades can turn against you quickly. That’s why we prefer to wait for breakouts or breakdowns with confirmation, rather than trade inside the chop.
If you're highly experienced and disciplined, range trading can be profitable. But for most investors, it's better to stay patient and wait for higher-probability setups that emerge from cycle and structure alignment.
Why do some indices move while others stall?
Different indices are made up of different sectors. QQQ is tech-heavy, while SPY includes a broader mix of sectors, and IWM tracks small-cap stocks. As institutional investors shift allocations between sectors, one index may rise while others stay flat or decline. This sector rotation is often what creates divergence.
By monitoring multiple indices, we gain a fuller picture of market health. If only one index is climbing, it’s often a false signal. True bullish setups require broader confirmation. That’s why structure and alignment matter so much in navigating sideways periods.
Resolution to the Problem
The issue with sideways trading isn’t the lack of movement—it’s the lack of clarity. Many traders respond by becoming overly aggressive in search of action, entering on incomplete signals. But this approach creates more problems than it solves. The real resolution comes from changing how we interpret the market during these periods.
Instead of trying to force trades, disciplined investors use this time to observe, assess, and wait for cleaner alignments. Sideways markets offer valuable information if you know where to look. They reveal where strength is lacking, where divergence is forming, and where the next opportunity might develop.
By focusing on cycles, price channels, and the alignment of multiple indices, we shift from reactive to proactive. This is the essence of strategy-driven trading. It's not about doing more—it's about doing less, with more purpose. That mindset not only protects capital but positions us to take full advantage when clarity returns.
Join Market Turning Points
If you’ve found value in this perspective, now is the time to take the next step. At Market Turning Points, we don’t follow headlines -- we follow structure. Our approach is grounded in cycle alignment, price channel behavior, and confirmation through forecast timing.
We provide daily forecasts, educational breakdowns, and real-time chart updates to help you stay ahead of the market -- not behind it. Whether you're a seasoned investor or still building confidence in your trading discipline, our tools are built to give you clarity and structure in a world of noise.
No more guessing games or emotional trades. We teach you how to identify key cycle turns and confirm them through structure -- so your trades are based on a repeatable process, not reaction.
If you’re ready to shift from reactionary trading to cycle-based discipline, visit our homepage and join Market Turning Points today.
Conclusion
Sideways trading can be a frustrating phase of the market, but it doesn't have to be confusing. When understood through the lens of structure and cycle alignment, these periods become preparation windows rather than traps. The real danger isn't the lack of movement--it's the temptation to act without confirmation.
We’ve seen this story play out before. In June, projected rallies failed to materialize because structure never confirmed. Today’s setup shows similar risks, with QQQ rising but SPY and IWM lagging. These are not signs of a healthy trend. Until broader confirmation emerges, strength should be viewed with skepticism, not enthusiasm.
The path forward is simple but not easy: observe, wait, and align. When multiple indices and cycle projections converge, the opportunities will become obvious. Until then, discipline is your edge.
Market Turning Points helps you track those alignments, offering the guidance and structure you need to stay on course—especially when the market isn't. Let this sideways phase play out. The next confirmed opportunity is already forming.
Author, Steve Swanson