So much for the breakout. The S&P 500 ($INX) finally crossed the 1,130 level on Monday, Sept. 20, a technical milestone that was supposed to mark the next big leg up for equities. Yet, since that strong start (closing at 1,143), stocks have spent the remainder of the week languishing. That's the rub with technical indicators: They trace not just changes in price, but in volume -- and volume has been anemic for ages.

Without volume, market action shows us primarily what computer trading is doing -- not actual human beings. The majority of daily volume comes from so-called program trading, whether it's sophisticated high-frequency algorithms executing trades in milliseconds or just indexed mutual funds and exchange-traded funds seeking to track a benchmark.

Without volume, the market is said to lack conviction, that oh-so-human trait that actually creates a definitive trend.

"Machines Talking to One Another"

"There was so much jubilation when the S&P 500 pierced the 1,130 level that it obscured a whole bunch of internals saying that, sorry, no, this was not a real breakout but actually another failed test of the interim highs," David Rosenberg, chief economist and strategist at Gluskin Sheff, told clients in a note Thursday. "'Volume never ratified the 'breakout.'"

Without volume, market action just reflects the "machines talking to one another," says Jason Weisberg, managing director at Seaport Securities. As he's been telling DailyFinance since March, the market needs to sustain a rally over several trading days on strong volume before he'll have faith that stocks can break out of their range-bound rut.

With so much money on the sidelines or out of stocks entirely, that could take a good long while. Institutional and retail investors just don't have much appetite for domestic stocks, as the flow of funds data continue to show. Since May 5, there have been 20 consecutive weeks of outflows from domestic mutual equity funds, according to the Investment Company Institute. Investors have pulled nearly $70 billion out of domestic stock mutual funds so far this year. That money is going into bond mutual funds and foreign equity funds mostly -- anywhere other than the U.S. stock market.

Still Resistant

So, of course, volume is thin. A broad swath of investors doesn't like stocks at theses levels, and that's a helpful way to think of the technical concept of resistance. When the price of anything (in this case equities) gets too high, potential customers resist paying for it.

Until the fundamentals of this market improve, range-bound trading appears here to stay.