By Matthew Kerkhoff
The major averages are giving us little to work with in the way of price action. They’re just treading water, sitting comfortably inside trading ranges that have lasted all year.
Below we see a daily chart of the S&P 500, with the index staying inside a 75 point range for the last six-months.
Conventional technical analysis would view this as a flag or continuation pattern, representing a period of consolidation before a resumption of the prior trend. That’s a nice way of looking at things, but we have no way of knowing what truly lies ahead. The break up, or down, will happen as the average discounts changing future economic conditions, not in response to imperfect classifications of historical price movement.