|SPY daily chart for May 29 2013|
The market is continuing its move sideways, giving support to both the Bull and Bear cause. The trading range is narrowing, as we did not drop all the way to the bottom edge of the channel at 1635, stopping at 1638 as buyers stepped in a little early and ruined the usual script. Previously, sellers had stepped in at the low 1670s and prevented a run to the extremes in the higher direction. What this suggests is a temporary balance in forces between Bulls and Bears, with everyone aware of the parameters and nobody on either side worried enough about direction to take drastic action in terms of closing positions..
This has happened before on this uptrend, so there's no reason to read much into that. The market is correcting sideways, as it has done before this year and, no doubt, will do again. You may think of it as a Bull Flag, if you wish, or a coil. Whatever it is, it will resolve, and it probably won't take all that long to do it. Perhaps some time next week.
We already are back in the main uptrend channel that the average blew above last week, so there's no telling when we will break this sideways trend and either continue the advance or have the usual summer softness. The underlying factors of QE stimulus remain in place, at least for the time being, and the economy is improving, both significant pluses for the market.