Indecision among traders caused the major indices to seesaw between positive and negative territory before finishing yesterday's session fractionally higher. The S&P 500, Nasdaq Composite, and S&P Midcap 400 indices all managed to gain 0.1%, but the Dow Jones Industrial Average was unchanged. The small-cap Russell 2000 rallied 0.3%. Stocks were at their best levels late in the morning, showed losses in the early afternoon, then recovered off their lows to close in the middle of their intraday ranges.

Total volume in the NYSE increased by 10%, while volume in the Nasdaq was 18% higher than the previous day's level. The market's gains on higher volume technically caused an "accumulation day" to register for both the S&P and Nasdaq. However, with such nominal gains and intraday indecision, the session certainly did not have the feel of institutional buying. Despite the rise in turnover, volume in both exchanges still came in below average levels, just as it has done nearly every day this month. Advancing volume exceeded declining volume in both the NYSE and Nasdaq, but not by a wide margin.

For the past four days, the broad market has been consolidating in a choppy, sideways range. Below, we have illustrated these ranges on the hourly charts of both the S&P 500 and Nasdaq Composite:

Because the broad market is consolidating near the high of last week's rally, odds technically favor an upward break out of the range and a resumption of that short-term uptrend. However, remember that the intermediate-term picture is still pretty negative, so we could just as easily see a resumption of the primary downtrend. Unfortunately, we may not see conviction in either direction until traders return from their summer vacations and volume reverts back to normal levels.

Until the S&P or Nasdaq breaks out of the ranges shown above, your best play is to enter SOH (sitting on hands) mode. It's really easy to overtrade in a range-bound market, but the most likely outcome is that you will merely churn your account and grind away any profits you may have recently obtained. Conversely, sitting patiently on the sidelines enables you to not only preserve capital, but be in a position to quickly take advantage of either an upside or downside move out of the range. If the market breaks out to the upside, be prepared to buy the sectors with relative strength such as Semiconductors or Telecom. If the major indices roll over, Financials, Oil, and even the broad-based ETFs are among the good short sale candidates.

Deron Wagner is the Founder and Head Trader of both Morpheus Capital LP, a U.S. hedge fund, and Morpheus Trading Group, a trader education firm launched in 2001 that provides daily technical analysis of the leading ETFs and stocks.  For a free trial to the full version of The Wagner Daily or to learn about Wagner's other services, visit MorpheusTrading.com or send an e-mail to deron@morpheustrading.com.