Shooting Down an Old Adage

An old Wall Street adage tells us never to sell a dull market.

But the reality is somewhat different. If we think of a dull market as one with low volume and small trading ranges and then look at history, we find that those exact characteristics tend to be seen at market tops. Look at the first chart below. We see that the trading ranges have recently been unusually small. On the second chart, I have plotted a three-day moving average of the S&P 500 trading ranges and inverted the scale so that peaks in the line represent lack of trading range. It is apparent that the biggest ranges are seen on washout lows and the smallest are seen on highs, or at least are not seen before a big advance....280 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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