Stocks have hit the snooze button…
For almost two weeks, the Dow Industrials have traded in a very tight range.
Well, the difference between the Dow’s intraday high and low has been only 1.35% over the past 13 trading days. That’s the lowest spread since late 1986, according to Bespoke Investment Group.
Of course, the 1986 market pause was one of historic proportions. The low-volatility coil led to a spectacular run-up in 1987 that didn’t slow down until the epic Black Monday collapse that October.
Which way will the Dow break this time around? Is it headed for upside mayhem, or meltdown?
If the broad market has any say in the matter, a breakout to new highs is in the works…
Yesterday, the Wilshire 5000 — an index that consists of all stocks trading in the United States — broke free of the bear and posted all-time highs. Few people watch the Wilshire — even though it’s one of the best broad market barometers out there. With little fanfare, it breaks free to blue skies…
As for the major indexes — they won’t stay stuck on pause forever. Something will have to give one way or another. As of yesterday, the Dow sits about 1.5% below its all-time high close of 14,164. The S&P has a little more work to do. It’s 3% below its all-time high close of 1,565.
If the Wilshire is any indication, the S&P and the Dow will follow to their respective highs in short order…
for The Daily Reckoning
Greg Guenthner, CMT, is the managing editor of The Rude Awakening. Greg is a member of the Market Technicians Association and holds the Chartered Market Technician designation.
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