Another day in the range.
The S&P 500 (NYSE: SPY) continues to trade in a tight sideways, range bound fashion – seven days to be exact.
Since the gap higher on 3/30 , SPY has vacillated between $132.36 to $1340.00.
Typically, when the broad market ETF trades in this tight of a range, we will see SPY spike out of the range in a violent way. I expect to see much of the same this time around.
Basically, the tighter and longer the congestion, the larger the move.
If the bears do take the reins they will first have to overcome the $131.90 of the first gap. If SPY continues to move through that level I would expect to see SPY move back to close the second upside gap that was established back on 12/1 at $118.03.
Remember the summer doldrums are right around the corner. Remember, Sell in May and go away?
I will be back later with a thorough discussion on the summer “phenomena”.