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This S&P action may be sending big market message

Traders work on the floor of the New York Stock Exchange.
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Traders work on the floor of the New York Stock Exchange.

The S&P 500 has barely budged in each of the last eight weeks—giving it the longest stretch of boring weekly moves in 20 years.

The eight lackluster weekly performances, ended Friday, have been less than 1 percent in either direction, for a total move lower in the S&P of just 0.36 percent.

This lull clearly must be saying something about the market's next move. It could be a sign the market is consolidating while investors watch Greece, wait for the Fed, or are just simply planning their summer vacations. But it could also be a sign the market is about to wipe out.

Market technician Ryan Detrick compiled information on the nine periods when the market saw this type of sleepy sideways move, going back to 1928.

For the collective nine instances, the return for the S&P 500 was positive 12 months later only 44 percent of the time, with an average 1.8 percent decline. The better return was after just one month, when the market was higher two-thirds of the time, with an average return of 0.7 percent.

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After three months, the market was higher during the nine instances 56 percent of the time, but the average move was a decline of 0.7 percent. The S&P, over the nine periods, was higher just a third of the time after six months, and the performance in those periods averaged a decline of 1.7 percent.

The best occurrence was 1964, when the market went sideways for eight weeks and ended up 12.2 percent higher a year later. The worst instance was 1981, when it idled for eight weeks before losing 2.6 percent in the first month and 17.7 percent within a year.

A sleepwalking market is clearly nothing to sneeze at, but Detrick believes it may be a period of consolidation with a correction in time rather than price.

Oppenheimer analysts say the small-cap rally that has paralleled the S&P's slow walk is one reason. "What we've said is with the small caps breaking out, we think this argues for the big caps," said Ari Wald, technical analyst at Oppenheimer Asset Management.

"If you go back to 1993, 1994, those were the kind of ongoing long-term bull markets, the kind of environment we think we're in as well. We're just not getting indications a major top is at hand, and we have been getting the right leadership at the same time."

Interestingly, in the current dull lull, financial stocks are taking the lead, and that was also the case in the last two long sideways periods, back in 1993 and 1994, according to analytics firm Kensho.

The financial sector in all three periods has an average gain of 3.6 percent. Between April 24 and Friday, the S&P financial sector was up 2.9 percent.

The worst performer—energy—was also the same in those last two periods and the current one, for an average loss of 3.4 percent. The S&P energy sector is down 6.7 percent since April 24.

In the last two instances, the telecom, financial, energy, consumer discretionary, materials and industrials sectors were all positive a month later, while health care and consumer staples were both negative, according to Kensho.

"Whether the grind continues or not, we think the grind is going to be higher," Wald said.

Disclosure: NBCUniversal, parent of CNBC, is a minority investor in Kensho.