The market has been trading within a 60-point range over the last two months. The S&P is currently heading toward the lower end of the range after last Thursday's 2.6% dump.
The questions for me are:
1. Does the convergence of the 200DMA line and the lower end of the recent trading range mean we'll see the S&P fall toward the ~880-level, fail to penetrate it, and perpetuate the rangebound trading action through the summer?
2. Or, on the other hand, if the ~880-level is convincingly broken, should I then pile into a healthy short position as the market breaks down yet again?
I'm waiting and watching, with a small amount of money currently engaged in the market.
With these questions in mind, I have a couple of other annotated charts in the back of my mind.
Here is a longer-term chart of the S&P showing an interesting trendline I found. The red line shows support in late-January and early-February became overhead resistance in May and June.
On the chart below, we see another recent, related trading channel broken to the downside:
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