A Tight Trading Range
I never like to see a tight trading range after a big move because it indicates very large resistance has developed in the direction the market was trying to go. So Wednesday's inability to move is bothersome. The market was trying to go higher, and then it ran into that overhead barrier we had been watching at about 1335 in the S&P 500. So, the current struggle is strongly suggesting a return to the bottom of the trading range we have been, namely 1295, and more likely 1265.
On the second chart are postings of the daily range in the S&P 500 as a percentage of price. The scale is inverted so that high points in the dark blue line are actually very small trading ranges. Note that the peaks on the line coincide with high points in the short-term market swings, and that we seem to be seeing such a peak now. This is a warning that the market is likely to go lower in the next few days. But for now, it looks as though it stays in the trading range. Remember, though, that the longer term work is still in a downtrend....275 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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