Market Does Not Have A Catalyst This Week – Action Could Be Light

Posted 9:35 AM ET - Yesterday, the market sold off before the open and it reversed sharply after an hour of trading. The volume was fairly light and stocks finished higher. Earnings season is winding down and there are not many economic releases this week. The price action will be subdued. The Unemployment Report looked good on the surface, but it was filled with seasonal adjustments. The number was inconsistent with the ADP report, rising initial jobless claims the last two weeks and the Challenger Gray & Christmas report that suggests planned layoffs will rise 17% this month. Janet Yellen will testify before Congress the next two days. I am not expecting much of an impact. The Fed will continue to taper and the bond purchase program should end in October. Fed speak this week will leave room for a pause if economic conditions deteriorate. Europe's PMI's were in line and Spain was particularly strong. China's trade balance will be released tonight. A month ago, it was extremely week and it weighed on the market. Some Chinese provinces are easing real estate restrictions to boost economic activity. New home sales are at a four-year low. Industrial production and retail sales will be released in a week so the news is fairly quiet on this front as well. Corporate profits are flat and revenues are up 3%. At a forward P/E of 16, there is room for a correction. If the SPY does not close below $187 today, I will exit my put positions on a time stop. I did not get the pullback I was looking for and time decay will become an issue. I don't see any catalysts to drive the market (in either direction) this week. Should conditions deteriorate, I will buy June put options. I hope I'm wrong, but this could be a very quiet week. . .

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