This Tight Trading Range Signals Caution
After a strong January, it continues to look as though the markets in February have run into a wall. In fact, on Monday, the trading range on the S&P 500, as we can see on the first chart below, was the tightest in many months. That indicates that movement has become very difficult, and coming after a long advance, it implies that the next move will be to the downside.
To put this into perspective, the second chart is a very long-term look at the Volatility Index. The scale is inverted, and the postings are monthly. The current reading reflects the most complacent attitude in many years. Combine that with many other indicators, such as the 55-day Arms Index, which we have looked at recently, and we have a market condition which dictates extreme caution....240 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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