The S&P 500 is caught in an extremely narrow trading range. What’s happening beneath the surface could decide where the index goes next.

Software stocks have sunk. Defensive names, including consumer-staples stocks like Walmart and Costco, have rallied. Yet, despite all of the chaotic moves seen in the U.S. equity market over the past few months, the S&P 500 has remained remarkably steady.

By Joseph Adinolfi