Since mid-January, the market’s movements have been more restrained, despite all the turbulence reflected in the news. The S&P 500, also known as the SPX, has remained in the upper half of a range that dates back to early November. It may not look like a classic example, but the index seems to be forming a complex and unusual bullish cup-with-handle pattern. For this pattern to be considered complete, we’d need to see a decisive break above the all-time closing high of 6,119, ideally followed by some immediate upward momentum. Given the current trading range of approximately 355 points, such a breakout could potentially lead to an initial move towards the 6,300 mark or even beyond.
Since the middle of January, the SPX’s price range has narrowed to about 200 points. Furthermore, several moving averages, from short- to intermediate-term, have also begun to converge. When the price lingers at the top of a range alongside reduced volatility, it often indicates that either an index or an individual stock is preparing for a breakout move.
Looking at price channels and volatility bands, the SPX is in a strong position. On the daily chart, its price is situated between the middle and upper Bollinger Bands, suggesting a solid foundation for potentially significant price movements in the near future.
