Clif Droke Discusses "Trading Range Madness"

He points out that a trading range is hardest on the emotions, which tend to swing from wildly bullish to despairingly bearish as it wears on.

The patience of investors begins to strain as volatility wanes and the opportunities for making money in a listless market dwindle. It’s at this point that a distinctive shift in investor sentiment can be noticed. My broker friends tell me that as a multi-week trading range wears on they begin to receive calls from impatient clients who at first inquire as to why the market isn’t moving higher. As the market continues to be held rangebound calls from investors become decidedly more emotional as impatience gives way to frustration. When the market’s directionless trend continues beyond 10 or 12 weeks, that frustration often gives way to outright anger or despair.

The rest of his article uses cycle analysis of the XAU gold-stock average, but his discussion of the toll a trading range can take is a useful guide to watching one's own emotions.