Today's closing market action will be key to the short-term direction of the major indices. I am focused on the S&P 500 Index. The important thing to me today is whether we close above or below the 900 level Thursday.

Despite huge intra-day moves, the S&P 500 has closed between 900ish and 1000ish every day since October 7. We had a close of 899 on October 10 and a close of 1003 on October 13. But both of those moves reversed back into the range on the next trading day. So these 1 day closes just below or above the recent trading range were not confirmed, in my view. I often prefer to have a multiple confirmation -- meaning more than 1 bar -- of a technical breakout/breakdown to confirm to me that it is not a "fakeout."

S&P 500 Index Daily Chart


October 22, the S&P 500 Index closed at 897. This was another minor break of the range -- still closing basically around 900 to 1000. So, at this point, I am looking for a confirmation of two days in a row closing below 900 or above 1000 to confirm a short-term breakout of this trading range. Barring that, I see us remaining in this range for the time being.

If we do close below 900 on the S&P 500 Index today, I will see that as a confirmation that the 2-week-plus trading range has broken down. At that point, the 800 level on the S&P 500 Index will look like a likely potential downside target, as that is the site of the 2002 and 2003 lows. If we do break down today, we may settle into a new trading range between 800 and 900.

As I write this during market hours, the S&P 500 has been bouncing around the 900 strike, having somewhat of a "tug of war" around that level. The bottom line is that I anticipate the close today on this Index will tell us whether the current trading range is intact, or has been violated to the downside.

Price Headley is the founder and chief analyst of BigTrends.com.