Monday, June 11, Daily Market Assessment

It Turns Out There Is A Three-Day Work Week!

If you look closely at the market action over the past several months, one notices that Fridays are mostly sideways or up, and Mondays are mostly sideways or down. And almost every Monday or Friday shows below average volume. So, what gives? Obviously, the institutional traders are not working on Mondays and Fridays! Given the money these guys make, I'm not surprised.

But the result is that I can't give too much credence to Friday's nice 160+ bounce in the DOW, even though it was a break in the three-day reign of the bears. Volume was off almost 25% from the day before, and the $2 drop in oil prices probably had as much to do with the jump as anything else.

In fact, the best metaphor for our current market is a boxing match. The guy in the red shorts is a bear, using fear of interest rate increases as a powerful short jab; the bull is wearing blue shorts, and he is constantly dancing around, waiting for an opportunity to throw a round-house knockout punch with some good news. These days, nothing is dominant; we're battling to a standoff round after round, week after week.

Today we probably won't see a big move in any direction, as the market waits for some new news on the economy or interest rates. Later in the week we should see some early peaks at 2Q earnings, which I believe will be as strong as 1Q earnings. That will propel the market up to a set of new highs, but probably won't happen until July. In the meantime, fear will rule, and another good-sized step down is likely, even if the major indices stay close to their 50-day averages.

Summary: Long-term Bullish, Short-term neutral