The S&P 500 is currently around 1,200, which is right in the middle of the 1,125 (support) to 1,225 (resistance) trading range that has been identified by many technicians. A trading range is the result of traders repeatedly buying at support and selling at resistance, keeping stocks stuck between those levels, or range bound.

The current range is being framed by a couple of trading realities:

• The S&P 500’s 52-week high is 1,227.08.
• The 1,225/1,230 level is near 1,235, a number that represents the 61.8% Fibonacci retracement from the market bottom. When the market approaches that number, technical traders often start selling in anticipation of the market bouncing off this level.

Underneath those numbers are some fundamental realities:

• The election is over, which removes a big potential upside catalyst.
• QE2 news has hit, so there is no upside catalyst there either.
• Corporate earnings are coming in on target, but with weakened forecasts. This is providing both the bulls and bears with ammunition to trade, keeping us range bound.

But there are also some wild cards investors need to be aware of:

First, do historical norms in chart patterns hold water in an era of 0% interest rates and massive liquidity injections by the Fed?

Yes, they do, as long as you confine yourself to looking at post-crash events. Louise Yamada, one of the best technical analysts around, has shown with some precision that pre- and post-crash behavior is very similar to that of the Depression. She also sees another leg down coming.

Second, the market is currently dominated by traders. And traders are driven by short-term trends, charts, rumors, and smoke signals from the Fed, Europe, companies and their in-laws. In other words, whatever works right now. And it seems these daily mini-catalysts are half bullish and half bearish. If they turn sharply in one direction, then the market could break out of the current range.

Conclusion: We are going to see this trading range hold through year-end barring any major market shaking news. If I am wrong, the bias is to an upside breakout, especially after Jan. 1, when new money typically comes into the market.