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U.S. stock exchange traded funds are bouncing within a narrowing range as markets contemplate their next major move before Federal Reserve Chairman Ben Bernanke’s speech in Jackson Hole on Friday.

It was at that event a year ago that the Fed chief indicated the second round of quantitative easing, or QE3, was on the way, which triggered a fierce rally in risk assets, including stock ETFs.

Some technical analysts note the S&P 500 has formed a so-called triangle consolidation pattern after the big sell-off that pushed the index down to 1,100.

“The vast majority of the time, triangles are trend continuation patterns,” writes Mike Paulenoff at MPTrader.com.

“The S&P 500 continues to ricochet between 1100 and 1200. That action is developing a bearish consolidation (as the prior trend was down),” adds Tarquin Coe, technical analyst at Investors Intelligence. “Its form is likely a triangle, which by its nature is agreeable with the current debate as to whether the U.S. is slipping into another recession or not.”

Triangle patterns suggest indecision in markets.

SPDR S&P 500 ETF (SPY) was fractionally higher Wednesday afternoon in choppy trading.

“The pause for breath is allowing oversold conditions to correct,” the analyst wrote in a newsletter. He recommended investors favor defensive stock sectors.

“The iShares S&P Global Healthcare Index (IXJ) has outperformed since February. That relative trend against the S&P 500 broke out to new twelve month highs at the start of this week,” Coe said. “The price has decent support across $50 [a share] but more importantly outperformance is expected to continue in these uncertain times. The fund has a yield of 2.1%.”

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Disclosure: None

Source: Stock Waver Before Jackson Hole