Summer Doldrums. Look For Choppy Trading With A Slight Upward Bias.

The market has been flat the last few days and we are settling in to the summer doldrums. Trading volumes are light and we can expect choppy price action with a slight upward bias. Europe posted better-than-expected GDP. Their official PMI ticked into positive territory last month and analysts are calling for improving conditions in the EU. Europe has been in a recession for many quarters and any uptick in activity will strengthen the market bid. Last week, China posted better-than-expected economic releases. Exports to Europe increased 3% and that is a positive sign for both countries. China's government said that it will not tolerate economic growth under 7% and the PBOC safety net has restored confidence. Domestic activity has also been improving. With the exception of July's jobs report, all of the other releases have been positive. Tomorrow we will get Empire Manufacturing, the Philly Fed and initial jobless claims. All of the numbers should be market friendly. Earnings season is almost over and cash flows are at record levels. Corporations are lean and mean and any uptick in demand will go straight to the bottom line. Congress is in recess and that is also constructive for the market. Debt ceiling threats will be kept to a minimum. Asset Managers will not chase stocks at an all-time high, but they will buy dips. That means any decline will be shallow and brief. We might see a little profit taking from time to time, but the market should be able to bounce right back. I am searching for stocks that are breaking through horizontal resistance. I'm buying calls and as soon as the momentum wanes, I exit the position. I will not buy puts unless the SPY closes below $167. This is a great time to step away from the market for a week or two. If you are trading, keep your size small. Look for a quiet market the chops back and forth on light volume. . .

Daily Bulletin Continues...