Trading Ranges and Investment Ladders

The broad S&P trading range of 1200 to 1320 remains in place. The topside of the inside 1230 to 1290 range was tested earlier this week, leaving the 1230 area as the next test and an area where traders can lighten up on stock short positions.  The swing point of these two ranges, 1260,  has seemed significant in terms of suggesting the next test move.  We don’t believe the market is set to trend out of the area at the moment.

It might be good to go back and review the investment ladder concept.  Earlier this year we devoted a lot of time to the 1260 to 1420 ladder which was replaced with the current 1200 to 1320 ladder.  Depending on the nature of an investors portfolio breaking the portfolio down into four segments keyed to the four levels of the range 1200, 1230, 1260, 1290, 1320 with the smallest positions at the 1320 level and the largest at the 1200 level seem appropriate on the first bounce.

8:36AM CDT