Tuesday was another day of gains as the bulls slowly grinds higher. We stumbled a bit in the early afternoon but the POMO buyers quickly jumped in close us in the green. Breadth was positive as oil, steel and commodity plays bounced back with the Euro.
The tight range over the last three weeks is hinting at consolidation. The breakout or breakdown could run in the 5%-plus range. The longer this sideways pattern lasts, the more explosive the break should be. Perhaps we are waiting for earnings season to kick it into gear.
If the recent range of 126 to 128 SPY holds, we are due for a dip after testing the top of the range again Tuesday.