One way or another this tight range is going to break. The summation index has had a very nice run since Mid-June and the fact that it went from such an oversold area to overbought suggests higher prices are coming, but it’s not a guarantee. I would almost liken this pattern to a bullish flag formation. The Nasdaq chart is below the summation and has a distinct reverse head and shoulder formation, which again has bullish implication so the odds are looking like the markets are going to break to the upside.
I would say the big negative is that there’s more nervousness than bearishness out there and I’m not sure that’s a good thing for the bull’s case. We sure do live in interesting times.
