With the S&P 500 locked in such a tight trading range, I'm not sure whether it's better to describe the market as frustrating or just plain dull.
With European markets up early this morning, it looks like Europe is voting for a breakout to the upside. But British Prime Minister David Cameron has threatened to put a spanner in the works, and he traveled to Brussels to keep the overzealous French from imposing a "Tobin tax" on financial transactions in the European Union. While such a tax might help bailout the wayward Greeks and Italians, it would put a serious dent in London's position as a leading global financial center. And there is no way that Cameron is going to let that happen.
In short, today's markets are all about headline risk, and Mr. (European) Market's mood swings. Or, as French Prime Minister Sarkozy would put it: Plus ça change, plus c'est la même chose. (The more things change, the more they stay the same.)
With all the focus on the latest shenanigans in Europe, it's been almost too easy to miss a crucial development in the U.S. S&P 500: Despite the market's sluggish behavior over the past four trading days, the S&P 500 is once again bumping up against its 200-day moving average.
As even non-technical analysts types will concede, the 200-day moving average is the "mother of all technical indicators." Once a market breaks through that crucial level -- and stays there -- many long-term investors feel a lot more comfortable entering the market.
If there is a self-fulfilling prophecy among technical indicators, then the 200-day moving average is it. Alas, this year, even this tried-and-true indicator has been as frustrating. The S&P 500 traded above its 200-day moving average between early September 2010 and just a day or two before the market collapse in early August 2011. In that case, it proved to be a remarkably prescient indicator. Since then, it's been less robust and reliable.
The S&P 500 actually traded above its 200-day moving average -- very briefly -- on the tail end of the remarkable rally in October, only to fall back below it almost immediately. It made another run for it in early November, peeking above the 200-day moving average level, only to pull back yet again.
If you look at the charts now, the market is right back at that same crucial turning point again; the S&P 500 closed Tuesday less than 6 points below its 200-moving average of 1264.23. To add to the confusion, the S&P 500 has actually briefly traded above this level intraday over the past two trading days.
So will the the third time be the charm? We should know for sure by the end of this week.