New catalyst required...

Now that we have seen the high for the recent range, we definitely need a game changing catalyst to break through it this summer.   Market closed relatively unchanged today on the back of a slightly dovish FOMC and a disappointing New Home Sale report (builders rallied 2% ).   For some reason, this market has been able to shrug off a number of disappointing Eco. data lately.    Although this may seem positive,  we don't believe this is the kind of trend people like to see as this week is proving to be a set back (not holding 200ma).  Our most important gauge is the 20MA and the market is toying with it today.

The longer we spent the trading in the current range and setting up more mini support/resistance levels, the more distant the April high feels.    Essentially, market needs to prove that the recent Eco. data is nothing but a "hiccup" along the recovery in order to convince the market participants to fully get back into this market.   Today,  FOMC speculation came to fruition as eco growth/ inflation risks were ‘mildly downgraded”.  The earning season is almost upon us and unlike the last quarter, nobody really knows what to expect.    For the last earning period, we know that it's almost too easy to beat the estimate.   We just can't say the same for this round.    The only play on our list that we are confident that'll crush the estimate is "Apple".   However, there's really only one Apple out there.   Normally, we'd start looking at some plays for a potential pre earning run.    Given the uncertainty of the overall market, we don't think it's a good idea this time.    Like many others, we wanted to see if the recent weakness in Econ. reports are really suggesting the Corporate America is having a slowdown.  So far, we’ve had ‘softer’ reports, but the companies reporting have not been the best ‘barometers’ to measure things by.

For the next few weeks, it's probably safer and easier to play the current range as oppose to wish for something magical to happen.    Between the recent lows and highs, we are currently a tad above the middle point.    We know which plays are capable of bouncing back into Q end, so there's no problem of play selection if this is still to occur.   The only thing you’d have to watch is your position size, notably in what you know are high bet/high volatility stocks.