In our update last week (Market Update: The New Trading Range And How To React) we discussed the trading range on the S&P 500 from approximately 1,350 to 1,425, which corresponds to 135 to 142.5 on the SPDR S&P 500 ETF (SPY), as depicted in the chart below. Interestingly, the bottom end of this year's range was the high end of the range during the first part of last year.
Last week we expected that the market would test the bottom of the current range, which is where it spent most of the last few trading sessions. The market will now either maintain the range or breakdown from it. We are preparing for either scenario to play out and will adjust our portfolios accordingly.
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