SPY Will Test the All-time High. Watch the Early Action. No New Info From the Fed. Resistance Will B

During the last few weeks, the S&P 500 has dropped 100 points and it has recovered. This has been a wild ride and the futures are up 18 points before the open this morning. Comments from the Fed Chairman were construed as dovish. This move will take us right up to the all-time high. Surprisingly, the statements have not changed much in the last month. The Fed said that it will taper when economic conditions improve. Ben Bernanke said yesterday that an unemployment rate of 7.6% is still too high and the Fed needs to remain accommodative. Even when they start tapering, the policy will still be "loose". They still plan to purchase bonds and to add liquidity. The timetable for the taper still appears to be September. The panic selling in June was an over-reaction and so is the snapback rally. The market belongs somewhere in the middle of the range (SPY $163). Asset Managers have been selling bonds to get ahead of the curve. Some of that money is rotating into equities. Interest rates are rising and the trend points higher. During the last two months, economic conditions are starting to slip. China's PMI was weak in June and the recent trade report came in light. Analysts have been calling for a bottom in Europe since January and we still have not seen an uptick in demand. Emerging markets are also starting to slow. Domestic growth came in at 1.8% in Q2. The sequester will take a few more months to run its course and many spending cuts have still not been implemented. Job growth appears to be rebounding, but only low-paying jobs are being added. Part-time employment is also padding the number. We need to add 250,000 jobs just to keep pace with the labor force. ISM services and ISM manufacturing were soft in June. Pre-announcement warnings have been negative buy ratio of 5:1. Almost 15% of the S&P 500 has guided lower. Revenues are expected to increase 1.5% and profits are expected to grow 2.5% year-over-year. These are the worst growth numbers in many years. I hear analysts say that expectations are low and that sets us up for an upside surprise. With the market at all-time highs, I disagree. Stocks are priced for good surprises. Earnings could be a sell the news event. Friday, Wells Fargo and J.P. Morgan Chase will release earnings. I like bank stocks, but I don't believe they will move much higher on the news. They are making 52-week highs and the comps will be tough to beat. Commodity stocks rebounded Wednesday and this is nothing more than an oversold bounce. Global economic growth is slowing and the IMF is likely to lower its 2013 growth projections. China will release industrial production, retail sales and GDP Sunday night. I believe these numbers will be very weak. The PBOC does not plan to ease and the government does not have any stimulus plans. I still believe that the market will trade in a range this summer. We will test the all-time high today and the market should back off. The rally during the last two weeks has come on extremely light volume and I don't trust it. My comments are being written before the open Thursday. I believe the market will surge higher on the open and it will peak after an hour of trading. Prices will stall and we could see a reversal. Fed speak did not yield any new information and this rally is an overreaction. If I see a reversal I will buy puts. If the market closes in negative territory, I will add. I am not looking for a bloodbath, but I believe the SPY will drop to the middle of the trading range ($163). If I'm wrong and stocks continue to surge higher, I will sit on the sidelines. I can't get long at this level and I can't get long ahead of China's economic releases Sunday. Once the earnings releases start, I will have more information. Strong guidance for Q3 is the only thing that can get me to buy in at this level (unlikely). . .

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