Today I’m taking a look at the overall S&P 500 market, rather than an individual stock. As we can see, the market has been churning in a large range of 2878.50 to 2525.00 for several months. What else is happening? That range keeps getting tighter and tighter.
When this type of chart formation occurs, it means that the market can’t make up it’s mind to be bullish or bearish. There are good arguments to be made for both prognostications. As the range closes down even tighter, a breakout is sure to come.
The chart pattern doesn’t predict which way the breakout will happen, just that “something BIG is brewing.” The 200-day moving average can be seen in the chart above, which is the thick purple line support the S&P 500. Its current value is 2612.00. Will it bring buyers back into the market again, for the ninth time? Or will the breakout occur lower, much lower, this time?