For the last few weeks the market has been slowly moving lower. The S&P 500 has been making lower highs and lower lows. From a chart perspective there is a wedge pattern forming that tells me that the market is almost ready to make a big move. However, there is one big technical indicator that tells me that we will have to wait a few weeks for the move to come.

More important than technicals is this week's ECB Meeting. The ECB is going to tell the market whether or not they are going to implement a QE program, and if they do, how much. There are two scenarios that I can see happening. The first is a big rally in global markets, something to the tune of 2% (for the S&P 500). However, I think this move will be quickly reversed over the following sessions as people will then realize that QE may not be able to fix all of the problems in the world. The second scenario is that the ECB either does not do QE  (which would be catastrophic) or does not do enough. If either one where to happen, I suspect the market will have a significant breakdown.

Even though the ECB will cause a lot of market volatility, I believe the market is going to be stuck in a range for another week or two for one key technical reason. The Bollinger Bands on the S&P 500 are too wide. Before every big move (breakout/breakdown) the Bollinger Bands were very tight. The upper band is currently around 2100. Before the S&P 500 can make a break one way or another we need to consolidate within the tight Bollinger bands.

The overall market tone seems to be bearish, however a sustained move back above 2050 would change that. 2050 represents the 50 DMA, and a break above there would negate the bearish head and shoulders pattern that has formed.