Market Is Trapped In A Range – Don’t Be Tempted – Keep Your Powder Dry

Posted 9:00 AM ET - The S&P 500 is trying to float above the all-time high. The momentum has stalled and there is no catalyst to drive the action. Profit-taking is keeping a lid on the rally. Trading volume is extremely light and the daily ranges are compressed. We are in a news vacuum and we can expect this to continue. China's trade numbers were little light and that is weighing on the market. Imports rose 11% (18% expected) and exports rose 7.2% (11% expected). The next significant economic news will be released in a week (FOMC minutes). Earnings season is winding down and good news is priced in. Retailers will start posting results and they will be weak. The Federal Reserve and Congress are in recess. Higher interest rates and the debt ceiling will loom over the market in coming weeks. Swing traders should keep their powder dry. The best part of the trading year will soon be here. Day traders need to trim their size and activity. The market will probe for support this morning and I will be trading. Relative strength will be easier to spot and the dip will provide a good entry point. I want to trade from the long side since that favors the recent momentum and trend. I will set passive targets. The doldrums will last a couple of weeks and the activity will gradually improve. We will see normal trading conditions after Labor Day. . .

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