Back in trading Range

Figure 1. Two Year Weekly Chart of SPY

Figure 2. Six Month Daily chart of SPY

 The last several trading days have been quite a powerful rally from 108 to 119 on the SPY. The SPY is back above the 50 DMA (see figure 2). While it is nice to see such a powerful rally, the larger picture still does not look particularly bullish (see figure 1). The general market does not look technically strong on weekly chart as all the major moving averages are still declining. In my experience range bound markets, especially ranges within a larger term downtrend, are particularly hard to trade. Usual characteristics include lots of volatility and false breakouts (see red circles on figure 2). I still being patient about putting money to work in this market. I would like to see a break above 122 on the SPY and then see if the market has the ability to stay above that level. I am looking for a change of character in this market before trying long side swing trades. If this is the start of a real rally and conditions have really improved then there will be plenty of opportunity to trade. There is no need to try and call the bottom.