Look At The Big Stock Market Picture

Everyone wants to know where the market is going to go, after such a big run. If history repeats, the most likely is a well-defined trading range, as the sector rotation continues. This type of trading range is not very uncommon, although we haven't seen it for a number of years in the U.S. equity market. For awhile now, we've either been in a bull or bear market mode. But, believe it or not, equity markets spend a vast majority of their time over the long-term within sideways trading ranges. The U.S. market is overdue to see one of its own.

I've put together charts of the Dow, S&P 500, and the Nasdaq illustrating the trading range zones that are easily identifiable. As you click on each chart, you can see that I've also outlined bearish and bullish trading zones. As the market moves into either of these zones, it will mean a market that is going to continue its bullish or bearish ways, instead of sticking to its trading zone. My view for now is that we'll likely stay within this zone, which means you have to be a little bit cautious as we enter the top end of that trading range.

Why do I look at the big picture? Because I've learned that as an investor, you have to let the market show you the way. No matter what you and I think about where stocks should go tomorrow, next month, or next year, the market is going to do exactly what it wants. Our goal is not to be right in our views, but to make money. Watching the market's big picture is one way to make sure that you don't let your own opinions get in the way.