At the Top of the Trading Range

The bounce off support last week has led to a return to the top of the trading range. The lower boundary is indicated by yellow ellipses and the upper by red ellipses on the first chart, below. Again on Wednesday we saw a very short Equivolume box, which is typical of a market that is encountering resistance. Neither buyers nor sellers can get the upper hand. I do not think that either the 17,000 level or the slight penetration of the old highs are particularly important. More telling is the obvious hesitation in the region of the recent tops.

Another concern comes from the second chart, the Volatility Index (VIX). It is again at historic extreme levels of complacency. That is reinforced by overbought intermediate-term readings for the Arms Index. We are held in a tight trading range, and the very square Equivolume entry after an advance suggests it is going to turn prices lower over the short term, at least....223 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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