Trading Ranges

Low volume rally continued through yesterday with NQ100 once again trying to lead the overall indexes higher. Bears have been slowly ground up this week with no follow through from last Friday's weak close. DJI has become the dog with the SP500 running a close second. News about oil is going to play constantly but it may be in range bound land for awhile. Just when these indexes look to be at point of bear or bull joy, they quit.

Summer Is Here

Markets continue volatility dive and even when hard breaks appear the action is thinner. Summer has set in and range bound trading will be the feature through July at least. Election year talk will become a bear focus especially if downside objectives become hard to reach. Bulls will use the historical data that markets tend to do well in inflation patterns and much better under Democratic than Republican administrations.

Early Rally

Early rally today a follow through from yesterday's modest gains. Gloom and doom of last Friday's close and market attitude certainly set up conditions for a short covering rally. NQ100 leader once again which is a positive if it can hold. DJI and SP500 need a significant pop to convince many there are any legs on this action.

Bull Bear Notions

DJI is approximately 155 days and 11% off it's all time high with bears insisting current value does not reflect the magnitude of economic distress prevailing today.The usual bull market salesman who frequent cable market news channels are quieter these days, but like the bear extremism of late, both use index prices too often as direct indicators of total economic activity. Dollars spinning around in the speculation and investment in market indexes represent notions of value many times outside daily economic readings. The bears are obviously disappointed the DJI, SP500, and NQ100 are not hovering slightly above zero just as the bulls are frustrated with their inability to achieve values from contrived formulas projecting ridiculous upside targets. The bears need to stop looking for a crash and the bulls need to learn how to trade.

Bear Raids

Bear raids on lite volume story so far today as indexes become extremely oversold. Three day weekend will reveal little in the way of new insight. Bears sees markets not reflecting the hits the economy is taking. Bulls see value pegged to future demand for investment and the tab for bad trades already picked up by the Fed.

Fine Whining

Indexes traded in the smallest ranges of the year with added volume on some pricing. Oil and inflation still the items of market concern with Bill Gross of Pimco stating inflation has been understated for some time. No kidding? Oil executives on Capital Hill testified high oil prices were a result of the forces of supply and demand. They warned against governmental price intervention and said things would get better if they were allowed drill for oil anywhere they wanted. They do not guarantee that would bring oil prices down but it would insure their ability to continue taking governmental tax subsidies which is what they really mean by the forces supply and demand. These oil executives, like so many of the trading operations on Wall Street over the years, have become experts on taking, and when not taking, whining about not taking. In their minds, economic theory holds that if you take away the ability to take advantage of governmental support, one creates a whole lot of whining. The farming industry just got their 'taking' package in the form of a new Farm Bill. Good thing we avoided all that whining.

Bears hope to use the end of the three day weekend as the tipping point for much lower prices this summer. Bulls have had a slam and need the break to stall here or face a trending lower range bound dog.

Pounding Markets

Post Fed Minutes action gave sellers new strength yesterday as the DJI, SP500, and NQ100 all got pounded. Oil rallying helped the bearish chatter with continued belief in Goldman's and T. Boone Picken's predictive powers. Calls for some type of action by Washington to stem the gusher seems to find no ears in an administration tied directly to the oil industry. Of course exactly what could be done is not clear since the only real hammer would be to declare a 'liquidation only' order for all futures contracts by the CFTC and of course pigs fly. Others talk of declining open interest on the current oil rally as signs even the shorts have given up. They are right but neglect to point out however declining open interest on rallies is classically bearish because by it's very nature is topside liquidation, strong longs liquidating to weak shorts.

Stock bears now see this move as vindication of a market overdo for substantial price declines. The bulls have to now face a market without the hope of further Fed action and general lousy economic data. Range bound action will continue to be the backdrop for every over-reaction.

Directional Arrow

Decent sell off yesterday with the DJI and NQ100 holding just above key levels. Oil prices are blamed for the weakness in indexes as assorted calls for higher prices come from those with a positional self interest. Goldman calling for a super spike to pump it's own massive long position is certainly a bubbleland event. But those are the travails of the stock bulls even as they hang on to the greater portion of this year's rally. Friday's close in front of a three day weekend will be an effort to point a bull or bear directional arrow on summer but will have little to do with anything. The bull is closest to breaking out of the four month range but the bear has certainly become the majority view.

Today's Test

Both bulls and bears finding small victories in yesterday's action. Today's early action seeing pressure from PPI data. Bears need a failure a some proportion to damage prices before the three day weekend. Bulls just need to defend lower part of upper range. Jan 4 close line still key areas for DJI, SP500 and NQ100. They are 12800, 1423, and 1985 respectively.

Rally On?

Here the markets sit after climbing near the top of this year's range, and though they look a bit winded, they have continually marched over bear preachings. Tech has the look of a leader but let's face it, it is always where the weakest hands are. DJI is perched to move higher but has not taken out this months highs. The spot SP500 has just over fifty points to rally to get higher on the year but it may be the toughest rally all year.

Peering over the second half of the second quarter the markets are usually at a point in an election year where all the candidates begin offering 'elect me' incentives. But this year, with expanding credit crunch talk and talk of $5.00 gas prices by labor day, this may be the point where the bulls start feeling the front of the line pushing back.