S&P 500 has traded in 10% band since August

NEW YORK -- Despite the historic price swings since August — including Monday's 3.4% jump — stocks have gone nowhere: The market has been trapped in a 10% price band.

The big question on Wall Street is whether the next big move for the market is up or down.

"Range bound: what next?" is the way Jeffrey Yale Rubin and Kevin Pleines, analysts at Birinyi Associates, framed the debate in a note to clients.

They say the market has been "stuck" in a "trading range" since Aug. 11. The Standard & Poor's 500 has mostly traded between 1120 and 1210, with the bottom of the range anchored to the early August lows caused by the downgrade of the USA's AAA credit rating. The top of the range is the high in late August. The S&P 500 closed Monday at 1195, still in the range, but up 8.7% from last Monday's 2011 low.

Stocks have been manic-depressive, plunging on fears of recession or a debt meltdown in Europe — only to rally sharply on any shred of good news out of the eurozone or upbeat data that eases double-dip recession concerns.

The up-down, up-down pattern is being driven by traders watching the same stock charts who see buying opportunities at the low end of the range and profit-taking opportunities at the high end, says Chris Johnson, chief investment strategist at Johnson Research Group.

But nothing lasts forever. Typically a catalyst comes along, in the form of a positive or negative news headline or economic data point, that catapults the market into a new defined trend, says Todd Salamone, analyst at Schaeffer's Investment Research. Monday's rally came on "news" that France and Germany are committed to recapitalizing Europe banks and will announce a "durable" solution to its debt crisis later this month.

In the past 14 trading ranges since 1990, stocks have broken out to the upside more than 75% of the time, Birinyi data show.

The real action begins when the range is breached, Johnson says: "It's a game changer." Johnson's hunch is that the market may again revisit the low end of the range. He cites the struggling U.S. economy, fallout from Europe's debt crisis and a lack of buying from shell-shocked Main Street investors.

Salamone says predicting the next major turn is too tough: "We don't know."