What Tuesday’s Tight Range Implies

I’m starting to see a number of indications that the market is ripe for a pullback. One indication I noticed yesterday that will often suggest a pullback was the extremely tight range. Tight range can be a sign of indecision. When it occurs with the market extended upwards it can also imply the bulls are running out of gas and likely to step back for at least a short time. The study below demonstrates this concept.

Much of the edge here is realized within the 1st 2 days. If the market is going to act on this signal and flounder  it will often do so rather quickly.