What a “Coiling” Market Can Signal After Strength

12/15/2025

Investors often associate volatility with risk. In reality, risk is frequently highest when markets feel calm and confidence is excessive. Periods of consolidation after strength, while uncomfortable, are often misunderstood.

This one-month view of the S&P 500 ETF (SPY) provides a useful example of how markets behave after a strong advance and why recent volatility has not necessarily changed the broader picture.

What this chart is showing

Over the past month, SPY experienced a strong upward move, followed by a period of sideways consolidation near recent highs. Rather than immediately continuing higher, the market paused.

That pause matters.

Markets rarely move in straight lines. After sharp advances, they often need time to absorb gains, rotate leadership, and rebalance supply and demand. This process shows up as tighter daily ranges and reduced volatility.

Importantly, this consolidation has occurred near the upper end of the recent range, not after a breakdown.

Structure remains constructive

On this one-month timeframe:

• The market hasn’t made a lower low

• Pullbacks have been controlled and orderly

• Price remains above key prior support levels

This isn’t the behavior typically seen before major declines. Instead, it reflects consolidation after strength, a pattern that often precedes continuation when conditions align.

While no outcome is guaranteed, structure still matters. And structurally, this chart remains intact.

Bollinger Bands and bullish compression

The Bollinger Bands on this chart have contracted significantly, signaling falling volatility.

Historically, periods of volatility compression often occur before renewed expansion. When compression follows a strong advance and price holds near highs, it can indicate underlying demand rather than exhaustion.

This doesn’t mean the market must move higher immediately. It does however, suggest that the recent pause has allowed excess momentum to reset without meaningful technical damage.

Why zooming out changes the story

Short-term charts magnify individual red candles and headline risk. A one-month view restores perspective.

What may feel like instability on a daily basis appears, in context, as a market holding gains rather than giving them back.

This distinction is critical for long-term investors. Many miss opportunities not because markets fall, but because they step aside during consolidation and wait for clarity that only arrives after prices have already moved.

Multiple perspectives, one key takeaway

There are several valid ways to view this chart:

• Short-term traders see a range awaiting expansion

• Intermediate-term investors see digestion after strength

• Long-term investors see an uptrend that has paused, not reversed

All three interpretations point to the same conclusion. This is not a market in distress. It’s a market deciding its next phase.

What this means for long-term investors

Bullish markets rarely feel comfortable. They advance, pause, frustrate, and then continue. The pauses are where doubt sets in.

For disciplined investors, periods like this reinforce the value of staying aligned with strategy rather than reacting to short-term noise. Constructive consolidation allows portfolios to rebalance, risk to normalize, and long-term trends to remain intact.

At BFG Wealth Management, we focus on positioning clients so they do not need to predict the next move to benefit from long-term growth. We prioritize structure, risk management, and patience over emotion.

A coiling market after strength is not a warning by default. In many cases, it’s a sign of resilience.

Sometimes, the most bullish signal is not acceleration, but the ability to hold ground.

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Markets will continue to pause, move, and surprise. Your portfolio should be built for that reality.

If you have $500,000 or more to invest, schedule a confidential portfolio review with BFG Wealth Management. Request a Portfolio Review

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Disclosures: Investment advisory services offered through BFG Wealth Management, a Registered Investment Advisor. This material is for informational purposes only and should not be considered personalized financial advice. Please consult your insurance, financial, or tax professional regarding your specific circumstances.