After a summer of low volume and high gains, the stock market soon will face the challenge of whether it can sustain a rally once the crowd comes back from vacation.

A market that rallies without a lot of participation is generally standing on shifting ground, at least according to Dow Theory, which uses volume confirmation as a key tenet in testing strength.

With September historically a month where trading activity rises, and when volatility increases, the stock market faces a critical test.

"Our macro technical work displays an ominous foreboding which strongly suggests that the powerful summer run in rates, crude and global equities will soon be at end," Richard Ross, global technical strategist at Auerbach Grayson in New York, said in a note to clients.

"With both volume and volatility absent from the advance, and a myriad of major markets and macro proxies steaming into stiff resistance during a period of vulnerable seasonality, conditions are ripe for a rapid risk reversion to the mean," he added.

The "reversion to the mean" prediction is a reference to the belief that stocks will always move back to their long-term averages, whether lower or higher from their present positions.

 

The Standard & Poor's 500 (^GSPC) is trading well above its 50- and 200-day moving averages, suggesting a pullback is in order though the timing and degree are, obviously, uncertain.

"The first couple of days after Labor Day, the market most likely will go down. People will most likely want to take profits," said Michael Cohn, chief market strategist at Atlantis Asset Management in New York. "Everything is hostage to the news flow, and as it stands right now the news flow out of the U.S. has been benign to not-so-bad."