The trading ranges from mid-October are still in play, and they were the major reason why I made sure my Momentum Options subscribers came into new year lean and mean.

While there appears to be further downside risk and a slumping technical outlook, trading ranges can be maddening. I have also uncovered in my detailed chart work several possible “symmetrical” triangles that appear to be forming. These technical patterns often precede major market moves, but they can take a little time to play out.

With fourth-quarter earnings starting next week and geopolitical news continuing to unfold throughout January, a possible 5%-10% move from current levels is a strong possibility for the major indices this month. The trading ranges, along with the action in the Volatility Index (VIX), should offer excellent clues as to how the month will play out.

Below, I’ve given you the lay of the land and my best options ideas for how traders can get a jump on the action.

The Dow reached a peak of 17,977 in early November and has since made lower highs while consolidating within an 800-point trading range between 17,200 and 18,000 since mid-October. The mid-December low on the Dow reached 17,128. I predicted that a “golden cross” would form on the Dow’s chart in December, as the 50-day moving average did clear the 200-day moving average. Although this is usually a bullish sign, all of the major moving averages are flattening out and appear to be in the process of starting to move lower.

I will be tracking the Dow via Dow Jones Industrial Average ETF (DIA), while possibly playing February options on a move above Dow 17,900-18,000 or a move below Dow 17,200-17,100 this month.

The S&P 500 traded to a high of 2,116 in early November and has also proceeded to make lower highs over the past two months. The mid-December low touched 1,993, with a golden cross forming on its chart a few days later. The S&P 500 has been in an 80-point range between 2,020 and 2,100 since mid-October that was stretched on the mid-December pullback. The 100- and 200-day moving averages have been descending since late November, and the 50-day moving average is starting to roll over.

Bearish traders could zone in on the S&P 500 ETF (SPY) February 190 puts (SPY160219P00190000) if the index falls below 2,025-2,020 or if SPY shares fall below $202. These options traded more than 2,000 contacts last Thursday, as some traders bought protection on New Year’s Eve.

Bullish traders could target the SPY February 210 calls (SPY160219C00210000) if the S&P 500 regains the 2,070 level for another possible run at 2,100. These options were active last Thursday, as more than 5,000 contracts traded hands.

The Nasdaq made a run to 5,176 by early December but struggled afterwards with a lower low and lower high. The index bottomed at 4,871 mid-month and has traded in a 250-point range of 4,900-5,150 following the gap above the 5,000 level in mid-October. The 50-day moving average had been in a solid uptrend since then, but it leveled out last week. The 100- and 200-day moving averages seem to have peaked and are showing signs of drifting lower.

The Nasdaq has 50-60 points of downside risk to start the week, and I would target a move below 4,950-4,925 when looking to go “short.”

The PowerShares QQQ Trust ETF (QQQ) could be used to play a possible breakdown in tech. I will likely target the QQQ February 105 puts (QQQ160219P00105000) if the QQQs fall below $110 or if the Nasdaq falls below 4,925.

If the QQQs bounce back this week and clear $112.75-$113 and the 50-day moving average, I will target the QQQ February 115 calls (QQQ160219C00115000) to play another run toward $115 and possible all-time highs.

The Russell 2000 peaked at 1,205 in early December and was dragged lower mainly by the rising dollar. The selloff to 1,108 by the middle of the month represented an 8% pullback in just two weeks. I’ve been monitoring the bulls’ failure to clear the 50- and 100-day moving averages last week, and the sloping technical outlook looks bearish. The 200-day moving average has been in a steady decline since peaking in early August.

The small-caps have been flirting with a 60-point range between 1,200-1,140 since early October, which is why Thursday’s close below the latter need to be watched carefully. There is 4%-5% downside risk to the 1,100-1,075 level on continued weakness. A close below the October low of 1,078 could signal a pending market correction.

The Monday/Friday closes continue to be mixed, and this often is the case during trading ranges. The Dow closed lower last Monday to snap a two-win streak, but it has closed lower on four of the past six Mondays. This is a slightly bearish sign, so I am watching the action very closely this week to determine my next steps.

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