Forming a coiled spring.

Wednesday's action was similar to Monday's; A strong early morning rally was completely erased before a late jump took the Dow from the red back into the black.  Have you noticed how little the closing price of the S&P 500 has changed over the past four days? 

The S&P has been up five days in a row.  The past 4 closes saw gains of .67, .34, .03, and yesterday 1.23.  That's a total gain of .19% after 4 consecutive up days. 

                       Charts provided courtesy of www.decisionpoint.com

These closing prices seem to be hanging around the 2004 closing price of the S&P 500...


                            
This lack of movement lately is coiling up the tension like a spring.  We should see a solid move in one direction or the other fairly soon.  You can see in the chart, other areas in the past year when a similar lack of movement was a precursor to a volatile breakout.  Based on my indicators telling me we may need to see a bit more weakness before a long term rally can begin, my hope would be that the move will be down in order to set up a solid buying opportunity within the next month or two. 

If the market were to breakout to the upside instead, the intermediate term psychology indicators tell me that the bull market would not have the energy to be the real deal.  One more panic type sell off, preferably to the 200-day moving average or below,  would be a big help to set up the next longer term bull run.   

The I fund has really done well lately but has been quite volatile.  We are seeing 1% moves, up and down, a few times a week lately.  I'm still leery with the dollar being as strong as it has been.  Gambling in the I fund could pay off handsomely but the risk is very real.

Bonds found support again at the 200-day moving average but I'm not as excited about a bounce as I was in early August.

The G fund seems like a good place to be until we see the direction that the breakout is going to be.

That's all for today.  Currently 100% G fund.  Thanks for reading.