There at the Top?

What does it mean when trading ranges become small?

On the first chart, the 10 daily entries enclosed in an ellipse are very narrow and confined to a small sideways zone. Obviously, the markets have been encountering very difficult resistance after a rapid advance. On the second chart, I have plotted the five-day moving average of the S&P 500 trading ranges, and inverted the scale so that the smaller trading ranges are nearer the top of the chart. It becomes apparent, looking at recent history, that the peaks on the indicator coincide closely with market tops. These extremes suggest lower markets ahead....236 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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