Did you enjoy giving back exactly half of the “Europe is Saved” rally that began on June 4 @ SPX 1265? As outlined yesterday, it was the area in which to expect a bounce into month’s end and into the Flag Waving Holiday of July 4th.
Markets are up today almost a full percent but it feels as if they are sleepwalking. There is no passion, conviction or sense of purpose. Instead, markets are waiting for something.
It could be the EU Summit statements on Thursday. It could be the wait for more economic numbers that confirm a new recession has begun and the FED will have to act. Or that we are simply “muddling” along a journey to nowhere.
The only beneficiary of market movement within the trading range are HFT computers, degenerate gambling day traders and the System that needs the status quo held at all and any cost. As we’ve alluded to, “uppy goody, downy baddy” for the markets and after a short, sharp pullback the stock markets want to remains in their upward drift.
Remember this exact week last year? A fabulous 1000 point Magical Mystery Rally appeared before the weak economy and the dashed hopes of more QE that sent markets lower. We had this years Magical Mystery Rally in the middle of June. It’s done.
But this year, like last year and the year before, markets will be on the defensive with all the negatives that are well known, especially the realization that the domestic economy is very slow. Then, mysteriously, industrial production will pick up as the world gets ready for the Thanksgiving/Christmas selling season and another year-end rally. Are you waiting for the crash that “must happen”? Or the move to all time highs on the back of a “recovery”. Stop! Either trade the range or invest in cheap non-momentum quality.