Markets go up and markets go down, but they often go sideways, too. In fact, congested, range-bound markets are especially common now.
I call it "trading in the box." I'm going to show you why in a moment, because it's happening again - the major U.S. stock indexes are back in a box.
So now I'm looking for one very specific sign that we're moving on out of our latest trading range...
A Wider Range, but Stocks Are Still in a Box
If you look at the number of bars in the Friday incarnation of "The Box," you'll find 39 of 'em - that's one day short of eight full weeks.
So what does this tell us? Once again, there's a balance between buyers and sellers that can't break us out.
On one side, the bulls are still optimistic that the Republican White House and Congress can push through pro-business legislation. On the other side, bears think this run up has lasted too long and has to correct. What's more, they have the whole litany of other bearish economic arguments that have been in play for a half-dozen years.
Those issues of debt, slow growth, etc., will come to fruition at some point - just not yet.
Here's why...
The Narrative Isn't Changing Now
Last week, of course, we had several very negative geopolitical events play out. A terrorist strike in one of Europe's biggest cities. A chemical weapons strike that killed 85 people in Syria. Bellicose language from the president that was then followed up by immediate military action.
All three resulted in down moves in the market. More importantly for us here, all three down moves were temporary in duration and minuscule in price impact.
The bottom line - when multiple "fronts" of negative news can't push the market down, this is clearly showing us that the narrative of economic optimism is still dominating the price action.
That's telling me something about this next chart here.
I've charted some channels that could give us an "early warning" when stocks break out to the upside:
[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]
Note how this price action forms a mildly down-sloping price channel. A break of the upper channel on a closing basis will give us an "early warning" for the next up move.
In the meantime, this is the perfect time to grab some good, strong stocks that have been kicked around over the past week or so, just like we're doing in Stealth Profits Trader. I don't think we'll have long to wait for that breakout.
D.R. is showing his readers how to spot the market extremes that always come right before the juiciest trade setups. Click here to get his 10-Minute Millionaire service. It's free, and he'll send you your first trade right away. After that, you'll hear from him twice each week.
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About the Author
D.R. Barton, Jr., Technical Trading Specialist for Money Map Press, is a world-renowned authority on technical trading with 25 years of experience. He spent the first part of his career as a chemical engineer with DuPont. During this time, he researched and developed the trading secrets that led to his first successful research service. Thanks to the wealth he was able to create for himself and his followers, D.R. retired early to pursue his passion for investing and showing fellow investors how to build toward financial freedom.