9 Days of Choppy Trading

June 1st marked an upwards breakout in the S&P. Since then? Chop and slop while the trading world has waited to see if it holds.

The jury is definitely out but they simply must be getting close to a decision.

In the E-mini SP futures we have traced and retraced the same 25-30 point range for going on 9 days now - this is almost unheard of. A couple of times there has been a peek outside of 925-950 only to revert right back in - sort of like a Feb 2nd groundhog predicting the continuation of winter. 

The longer this goes on, the more dramatic the eventual break should be. Why? 

Well for one, the longer it goes on, the more stops accumulate above and below the range so when we do finally break through the "stop run" propels part of the first impulse move. After that, everyone who has waited on the sidelines (wisely), looks for a point to enter a directional market. This is in fact the human process that creates support or resistance. Never forget that basically we all look at the same data - regardless of how we slice and dice it.

In auction market theory, this is called a balance area and a search for value. Essentially right now, the trading world is signaling that this range is a reasonable valuation of future risk. 

But we rarely stick with our opinions for long.

At this very moment, it pays to be on the lookout for change while resisting the urge to be the smartest trader around and get in before the break. When it comes, there will be a 2nd chance!