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Thursday, March 9, 2023

How Long Can The Market Continue To Trade Sideways?

 How Long Can The Market Continue to Trade Sideways? 

The answer to that question is, probably a lot longer than you think. 

My first example of a market that traded sideways - for an extremely long time - is the energy market, after the financial collapse of '08.  

$DJUSEN - Trades in the same range for nearly 10 years, before finally crashing in 2020. Technically energy broke out to a new high in 2014, but after only a few months later, Energy was trading back in the same range again. There's also a massive H&S pattern that developed - before the crash... - if you look closely. 

The most extreme example of a market being trapped in a range was the period between 1966, and 1975 - another time of high inflation, during the 1970's. 

$SPX - Whipsaws into an expanding triangle pattern (aka a megaphone pattern), for nearly 9 years, before finally rallying into a bull market.   

One thing to note on the chart above is that the so called, "bull market" of 1972, was only another failed breakout, above the top of the pattern. 

Today's Market

$INDU - Today the market has only been trading in the same range, for around 19 weeks; right around where the Dow broke out above the 23,500 level, back in Oct. 

Many bullish investors are hanging their hat on that breakout, rather than preparing for a possible break of support. 

Figuratively speaking, we've only been trading in a range for the blink of an eye. 

Maybe the market continues to hold up until after Easter, or even May selling season, but this is no place to become complacent. 

Part of being an excellent trader, is being prepared for the unexpected, because let's face it, things seldom go according to plan. You have to trade the market you have, not the one you're hoping for. 

Short term 

 I found the $RUT trading in a little sideways pattern early this morning. 


Oil  trading sideways on a 1 min. view 

Even Natural Gas is consolidating in a range, after making 2 enormous moves. 


Last Chart shows a shorter term view of the sideways action on the Dow, and I encourage you to chart more than just the continuously manipulated $SPX. The DOW led this rally, in case you forgot.     

$INDU - last sold at the 50 day. Of course all eyes will be on the 200 day, if the previous low is take out. Also, all this sideways action points to a complicated, and difficult to predict, wave B pattern. 

Take Care, AA 

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