Stocks have continued to trade sideways. In fact, the S&P 500 has hung within 5% of its all-time high over the past two months, noted Dean Christians, senior research analyst at SentimenTrader, in a Friday note.
What's more, the S&P 500 has achieved just one record finish over that period - on Jan. 23 - and ended Thursday just 0.06% below that record, fulfilling a trading pattern that's often preceded past upside breakouts, Christians wrote (see chart and table below).
The S&P 500 has demonstrated remarkable resilience over the past few months, consolidating within a narrow range despite a flurry of alarming headlines. This sideways movement amid uncertainty signals buyers maintain control, keeping the market on solid footing," Christians wrote.
SentimenTrader found that such consolidation often precedes an upside breakout, with the index rallying 77% of the time in the following two weeks, based on 22 signals going back to 1928.