COILED SPRING

Markets gapped higher yesterday on the heels of strong European markets and fizzled into the finish with a red close.

A closer look at the numbers tells one that this market is coiled to move in a big way one direction or another. The SPX has been trading in an 80 point range (small) since January 24 with a typical daily range of approximately 23 SPX (large) points (13 SMA) over that period.

As I mentioned the other day, the Keltner Bands are outside the Bollinger Bands also indicating a tight range and a market set to break one way or another.

The old rule is volatility is mean reverting and low volatility brings high and vice versa and we are set to spring pretty pretty big one way or another. Not sure if today will be a fakeout like yesterday but watch closely cause I think the day of reckoning is close.