Over the last few months, the stock market has traded in a range that has confounded both bulls and bears alike. Now, we are fast approaching the top of the range once again. Will the averages disappoint once again or are we on the verge of a break out?

We turned to our old friend John Roque, technical strategist at WJB Capital Group, for some insight. Many readers know John either through these columns or because of his many appearances on CNBC and other media outlets.

"The S&P 500 Index has serious resistance at 1,220-1,227 and then 1,250," he says, "Meanwhile, support levels are 1,150, 1,100 and 1,050. However, 950 is not out of the question."

He points to the Dow Jones Industrial Average's 1965-1982 trading range as a period similar to that of today.

"After a turn down from the top of the range, the Dow would revisit the bottom of the range. The only question is what's the bottom of the range?"

When Roque looks at the technical action of the S&P today, he feels a certain sense of déjà vu. The technical action closely resembles two recent downturns in this decade: the decline that started in 2001 (the Dot-Com boom and bust) and the decline that began in 2008-2009.

"The only thing missing from this setup right now is a turndown in the S&P's 12-month moving average. But I think it will happen because the index's rate of advance has almost stopped."

Underneath this week's advance in the averages, Roque was not impressed with the market's internals. Some of the variables he looks at like the market's breadth (the number of stocks that are advancing in price versus those that are declining) are forming a negative divergence among New York Stock Exchange common stocks. The S&P's 500 stocks are also experiencing weakening breath.

"And when net new highs are also in negative territory, I get cautious. The markets have broken their trend lines and momentum is rolling over, which are two major concerns as well," he explained.

In this kind of environment, stability is in high demand. Two sectors where he sees upward momentum are in consumer stables and utilities. Both groups are outperforming the market but Roque points out that usually happens when markets experience steep declines.

Roque's technical view is a bit sobering, especially in the face of this week's euphoria over the coordinated effort by central banks worldwide to bolster lending to European banks (see my column "Deja Vu"). Remember, too, that investors are expecting some major new initiative to be announced by the Federal Reserve this coming Wednesday. Whether the Fed will meet expectations is anyone's bet, but the fact that traders have bid markets higher in anticipation should come as no surprise.

Traders have used recent events — the debt ceiling, the Fed's Aug. 26 meeting in Jackson Hole, European summits, etc. — to manipulate markets prior to these announcements. So far the evidence has not been encouraging. After each one of these events the markets has traded lower after two or three days.

Bill Schmick is an independent investor with Berkshire Money Management. (See "About" for more information.) None of the information presented in any of these articles is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at (toll free) or e-mail him at wschmick@fairpoint.net . Visit www.afewdollarsmore.com for more of Bill's insights.