Trading Range Mentality

May 2, 2006 · Print This Article

SPX (S&P 500 Index) has once again found its way back to the 1310-1315 range. Something has to give and something has to give soon. The market seemed to shrug off yesterday’s late-breaking news from Maria and moved higher throughout the day to close near the highs of the day. One more day of bullish seasonality and the market enters the “sell in May and go away” period. Will we see an immediate sell-off on Thursday? Eh, while I keep a close eye on seasonality I do not look at it as the sole reason to place a trade. It certainly weighs heavily on making trading decisions during certain times of the year, but like I said it should not be the only reason to place a trade. This might sound a bit repetitive, but if the market lives up to its historical billing and moves higher tomorrow we could be in for a high-odds setup later in the week.

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RSI Wilder (5) for May 2, 2006