Technical analysts refer to consolidation as a well defined pattern of trading within certain barriers. It is also considered a clear indicator of indecision. While some consider technical analysis to be a form of voodoo, it serves to be a very valuable tool when paired with understanding economic data.
Looking at the 3 month moving average of the S&P 500, you couldn’t ask for a better chart that typifies consolidation and indecision. Between Greek referendums, fears over Italian debt and occasional signs of growth coming from US economic releases, it has been quite a mixed bag of news; and the S&P500 is reflective of that in its technical patterns. In the meantime, all eyes stay focused on Europe as the G20 continues to deliberate. November has historically been a very strong month for the markets, but as is the wonderful legal disclaimer that all financial professionals use, “Past performance is not indicative of future results.” Ultimately, whether dealing in actual dollars or play money, we believe that fortune will favor those who are bold enough to stick to their convictions while trading in these frantic markets.
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