Let me explain. The chart above is a weekly look at the S&P 500 over the past two years with 2016 shown on the right. While the market was exhibiting topping indications for many weeks, the August 24 whoosh down really broke the market's back. Of course it has rallied back quite strongly, but look at how it's obeying that beautiful rounded top resistance as noted by the green line. Remember, markets often rhyme with history in terms of both price movement and time, and I think that's exactly what we're seeing here. The slow burn lower is mirroring the slow grind higher from the previous year. The market is trying to frustrate bulls and bears alike, refusing to trend hard in either direction (on a mid-to-long-term basis anyway).
With that in mind, I've sketched out what I believe to be a very likely scenario over the coming year. I see bear market plunges followed by sharp rallies, each shaking out the weak hands but all the while adhering to the rounded top formation. If you're not comfortable trading these swings, then you probably want to get defensive and play the long term trend, which as I said above, is lower.