Trading Range: S&P 500

Today's turnaround in the market helped reinforce the forming of a significant trading range between 800 and 880 on the S&P 500. The index slipped down to around 810 and proceeded to quickly recover once the mortgage subsidy report was released. As you can see on the second chart below, the S&P briefly broke below the 800 mark back in October, but since then has held strong, treading water above 800. Any considerable breakout on either end should be noted and taken advantage of. Looking at the second chart again, it seems like we're continuing to make lower highs (as indicated by the trend line) underscoring the lack of positive economic data as of late. However, with so much cash on the sidelines (see treasury yields), any encouraging data could spark a massive breakout to the upside. On the other hand, if unemployment accelerates faster than expected, and the idea of bank "nationalization" starts to become a realization, the 800 mark will be shattered. In any case, this is a range that needs to be monitored if you have any exposure to U.S. equities.

Chart 1:

Chart 2: