Stocks' Trading Range Now Beyond Compare

Tyler Durden's picture

Via Dana Lyons' Tumblr,

Over the past 40 days, the Dow has traded in its tightest range in at least 100 years.

About 2 months ago, the large cap U.S. stock indices finally managed to break out to new highs following more than a year of trying. After several days of follow through, the averages settled into a trading range. This was not an unexpected development, nor an unhealthy one. However, it would develop into an unusually tight trading range. And after a couple weeks, we began to publish some charts and posts detailing just how historically narrow the trading range had been. Well, we had hoped that each of the posts would be the last in reference to the range. However, we could not envision that some 30 days out, the averages would still be constrained to essentially the same tight range. Therefore, we make no apologies for (hopefully) just one more look at this historic range.

In today’s Chart Of The Day, we note that, unbelievably, the high to low range in the Dow Jones Industrial Average (DJIA) over the past 40 days is a mere 2.27%. For context, that is the tightest 40-day range in at least the last 100 years. And in fact, the next tightest range – at 2.53%, occurring from December 1922 to February 1923 – is not really even close.

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We say “at least” 100 years because we don’t have reliable daily high-low data on the DJIA prior to 1915. So it’s possible that this record range extends back even further – or perhaps to the DJIA’s inception. However, the point is made: the stock market is in the midst of a historically tight trading range.

So what will become of stocks due to this range? We don’t have any real insight on the potential resolution or ramifications beyond the obvious. That is, many of the market averages are like a tightly coiled spring right now. And a breakout of this range could be explosive. However, we don’t know which way that will be, nor when it will occur.

Our look at the tight 2-week range in the S&P 500 back in July revealed that similar ranges led to…roughly the same forward returns as any average day. We will say that our hunch continues to be that the interpretation of the present range should be that of a digestion of the July breakout, i.e., a continuation pattern. If accurate, the trading range *should be* resolved to the upside. We also have a hunch that such a breakout may turn out to be of the false variety, leading to an eventual drop back below the range.

However, that is mere speculation. All those hunches and a dime will get you a coffee (actually, you’ll probably need at least a dozen more dimes for that coffee). We will continue to follow prices and our quantitative models to guide us. If that false breakout scenario transpires, so be it. If it doesn’t, so be it.

At a minimum, hopefully this will be our final range-inspired post.

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More from Dana Lyons, JLFMI and My401kPro.

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SomethingSomethingDarkSide's picture

It's called Futures Manipulation.  There is no audit trail, and Central Banks can effectively hire Middle Men to trade on their behalf to make it all legal.  

The Fed is a Puppeteer, Futures the Strings, and the Market the Marionnette.

Skeero's picture

I wish this range was wider! I finally had to say the market isnt going down.. Losing to much money on PUTs. I won't be shorting again until the week of the election. Hoping for some crazy ass volatility lol

SomethingSomethingDarkSide's picture

I was losing money on TVIX as well.  With the most recent jobs report, and NY & London getting Shanghai'd, the only option left appears to be Gold related Call Options and Miners.  Volatility will return in October/November, but only if it is looking like a lock for either candidate.  Uncertainty is like printing press fuel right about now.

Slomotrainwreck's picture

At a minimum, hopefully this will be our final range-inspired post.

So be it.

NoDebt's picture

"The Fed is a Puppeteer, Futures the Strings, and the Market the Marionnette."

I'm putting that on a bumper sticker.

Skeero's picture

I set up a Guccifer support fund, please share! Most of us know he was punished for exposing someone else's crime. If you have anything I could add to make the campaign more successful let me know

 

https://www.gofundme.com/2mt69mc

 

Thanks!

More Ammo's picture

That is a funny picture.  Fucking cops in black hoods, on par for a police state, even the low level operatives don't want anyone to know who they are.

Now that is fear....

brada1013567's picture

It is called price stability management.

 

It is in our mandate.*

 

-J. Yellen

 

* As interpreted by Clinton Foundation Attorneys.

nsurf9's picture

Its not so much that doesn't go up - it already has!  The minipulation I have to wonder about is - it won't go down.  If the other side of the earth fell slap off the globe - it won't go down.  And, the media is like the home town football color-broadcaster for the home team - you can do it, go stocks go, go stocks go.

ejmoosa's picture

Hey, the same thing is happening with the employment numbers...

 

Dr. Engali's picture

Meh, BTFD..., oh wait. There isn't one. Buy the fucking flatline. Janet has your back. You'll see.

conraddobler's picture

Did someone say BTFD?

 

nightwish's picture

Exactly what you expect in a fixed market with the fed put helping the current political administration stay in power

chief's picture

stocks predict elections!! (or is it the other way round)...

Reichstag Fire Dept.'s picture

Only High Frequency Algobots can trade that tight.

Infield_Fly's picture
Infield_Fly (not verified) Sep 7, 2016 9:00 AM

It's just that fat cunt yellen and her other CB cocksuckers who are bidding all markets - $25 TRILLION in assets and counting for these douche bags.

 

 

Citizen_x's picture

Flat is the new Bull ?

 

I suspected something was amiss...

Thanks Mr Tyler for pointing it out

in a historical context.  The FED is

beyond historical context, so it drags

the financial markets with it. 

 

Stockholm syndrome...

vegas's picture

All that data is nice, but prior to 2015, we've never seen Central Banks and their Plunge Protection Teams in such force either. There is no free market in stocks, only outcomes Central Planners wish to see, and right now the focus is on the November elections, and we can't have the 0.01% get upset with volatile stocks that may cripple Cankles & Crew. That's the reason for the tight range.

 

www.traderzoogold.blogpsot.com

Hollis_Mulwray's picture

Not that I am bullish, by a long time market axiom is "never short a dull market"

silverer's picture

Boy this experiment in supercomputer manipulation of the markets is going really great! Hold on... hold on. Sniff, sniff... I think I smell burning wires...

Offthebeach's picture

( insert John Goodman voice )

" See Larry, see what happens in a statist, state/price control market Larry? "

 

 

Didn't Lenin do under his New Economic Plan try this?

Goldbugger's picture

It's Called the YELLEN PUT, prop it up till the election.

inosent's picture

DJIA 20,000 is very close, and would be potentially lethal to trump. Considering all the 100% efforts by the sleazeballs with the 'power' (the ones handed the power to create and destroy money - the american central bank - and all those linked to them) to stop DT, I have no reason not to expect the azhlz with the juice to keep the pressure on. i think we are still in a btfd market. nothing has changed.

meco1999's picture

If you look at the S&P 500, the July 1993-January 1994 period was actually lower volatility, with multiple 41 consecutive day periods where the max of the period and min of the period difference was below 3.25% (the past 41 days for the current S&P 500 max min was 2.91%). In August '93 there was a 41 day period completed with only a 2.38% max min difference. Also, the all time record low VIX close was set in December '93 at 9.31.

Conax's picture

As the rest of the world's markets twist in the wind, this one will still be going sideways or up slightly.

All the money that flees Europe and Asia will come and join the fun. This FED system is the Alamo for central bankers, if it falls, they all go to hell, so they intend to put the chart wherever it needs to be to continue on.

It's like gold- in the other countries gold has done pretty well against their depreciating fiat, here it is suppressed to protect the Alamo. The dollar gets bought up every time it slides, the bankers keep pet stawks from sinking, this is the Alamo, man. Where's General Santa Anna when you need him?

hartinvest's picture

For the S&P500 Based on cycles (70 and 140 day), 5-7 SEP should form a high, next 7-14 days should have a bearish bias. For more info go to:www.tripstrading.com

Grandad Grumps's picture

Auto pilot. One has to wonder who is actually entering the parameters for the daily trading. Just as with drone pilots, they don't even have to be humans as we think of humans.

Why all of the automation? Where does everything we produce actually go? Elysium?