..Memorial 'week'

Since when is this a 2 week holiday?...It definitely has this feel for the markets!

As the market finished near highs (SPX 906) of the day, the overall volume was actually better than last couple of days, it‘s always a better tale if it‘s greater on the upside than downside.    This tells us that more participants are coming back from the Memorial holiday.   It’s about time, it is Thursday!!    Action was pretty good today,  but it was also a bit boring and scattered as the lovefest with '900' drags along.   The focus remained  on TSY and today’s auction  bid up stocks in the afternoon.    As discussed yesterday,   just like the SP/UK doom the ‘hissy TSY fit ‘ evaporated.    What we saw in Treasury’s yesterday was a rare hedging event,  hopefully investors/ traders won’t be consumed of playing equities on every tick up or down on the yield.   We’re even guilty today as we put the $TNX on our trading plat’s!.  BUT! ..in the bigger picture,  the newsmaker besides TSY is crude today, a higher TSY and a higher Oil price cannot go hand in hand.  It will make all our best expectations very gloomy!.

What is so fascinating about this market is its trading range of late.  It literally takes one day to go from top of its range to the bottom of its range, and vice versa.    One good day,  we are back near the top while a bad day will get us to the bottom of the range.     This has been going on for almost the entire month of May.   Someone has to give up eventually, we say!    To us, regardless what happens to the outcome of this consolidation,  we feel the upside potential far outweighs the downside risk.    While we can see the down side risk to SPX 825 to SPX 840,  we just can't see the upside limit at this point.    Basically, the longer you consolidate at the current range, the more likelihood we'd go into some new territory if we break out.    This is under the assumption that this market stays in the current sentiment.   If the sentiment improves, even better.   

The ‘ holding pattern’,  we think is the market waiting for China to make the next move literally.  It’s been pretty quiet lately after the initial ‘leg’ up and now we wait for signals for the global , eco’ outlook from China.   This will (if positive) include help for the tech outlook and definitely the commodity picture for the 2nd half of the year.

We remember last summer's action was a bit brutal.    All of the momentum stocks were taken down hard last summer and we were literally out of stuff to play long .    But, now it’s a different game as the economic trough  nears this summer.   This time, with the current earning period at an end,  we have an abundance of earning plays on our list that we can play for and from what we can see Q2 won’t be bad at all for Technolgy co’s    Generally,  healthy sentiment toward the equity market is all we really need for our strategy to work in this summer,  even if the market doesn’t power beyond SPX1000,  we feel it will provide a sector/ group play.   It might be Tech, Commods, China with EPS the coating feature in those or others.

Tomorrow is the last day of this ‘Memorial week’ and we definitely can tick a little higher tomorrow based on today's picture.  This will set up for the possibility of getting a volume break…NDX, CRX and ultimately the SPX very soon.   As we said the other day in Alerts-comments,  the break should be already underway in the vicinity of 915-920.    Right now,  we feel that bulls definitely have an upper hand heading into the weekend.    According to the Bears, we should be at least a hundred points lower than where we are now.    As long as the Bears see the upside risk in the SPX break levels and with many people still on sideline,  we have a really good chance to do some damage on the upside going forward..