Although probably frustrating for many, the current market is a dream come true for swing traders, and for those who pay attention to market internals.

How will we know that the market has entered a trending stage? When overbought market internals lead to a sideways/up movement in an uptrending market (November '11 - March '12), or when oversold market internals lead to a sideways/down move in a downtrending market:

Another tool that can help keep us on the right side of the market is the OddsTrader Risk/Reward Oscillator, which eliminates a key drawback of traditional oscillators; namely, their propensity to stay overbought in an uptrending market, or oversold in a downtrending market, thus giving false signals. By contrast, the R/R Oscillator remains oversold in an uptrend, and overbought in a downtrend, thus identifying opportunities to stay and trade with the trend.

In the last article, two weeks ago, we mentioned that the SPX should trade above 1337 and 1317 for the bullish case to remain alive. This proved to be the case, and now the relevant support levels are 1325 and 1300: