Since last month's update the S&P 500 held above the midpoint of the sustained trading range and has been inching towards the upper end of the trading range.  The 200 day moving averages is now hugging the mid-point of the range so I don't expect a breakout of the range to occur anytime soon.   Look for profits to be taken by traders if the market tests the upper resistance line of the trading range. 

The S&P 500 has exceeded the mid-point of the range it has been in for the past several months.  Time will tell if the mid-point support line holds.   Right now, the market is mixed with the daily trend indicators turning bullish and the weekly trend indicators remaining bearish.   Sentiment indicators such as the new highs vs new lows ratio is also bullish so we could see the market test the top side of the trading range in the coming weeks.

The market has been in a prolonged trading in a broad trading range for some time.  I’ve drawn horizontal lines to identify the range on the chart below.   Currently, it is approaching the 200 day moving average as well as the mid-point of the range from the bottom.  Both could prove to be extreme resistance levels for the market to overcome in the short-term.  The expectation is that it will be a while before the market breaks out of the existing trading range so traders should anticipate taking smaller profits and placing tighter stops.

Today the market failed to close above the almighty 200 day moving average.  The abrupt about face shows that this moving  average could now be a substantial resistance line.  I’ve drawn a fibonacci fan for the latest down move to show how prices have been hugging those levels.  Since Monday is a holiday, Tuesday (6/1/10) should be an interesting day as the 200 day moving average will converge with the upper most fan line.  As some of you know I am not a huge fan of using fibonacci analysis because prices can deviate from this method quite a bit but it is interesting to see how prices behave when they do adhere to it.  In this market condition, I would recommend either sitting on the sidelines or trading primarily short.

Today the market is brimming with negative financial news.  Everything from Greece’s issues to Goldman Sachs.

The below chart of the SPY shows how the market appeared to be in a healthy up trend but one of my trading indicators predicted that the rally was in trouble and that the market decline was imminent a full 7 days ahead of time!.

Understand, this is the exact type of information that gives you an edge as a trader.  If you want to finally join the ranks of profitable traders, I invite you to get my trading course today.  You can make your investment back with a single trade…not too bad of a deal.