The market has been incredibly resilient this week. Even after the President and the Speaker of the House bashed each other publicly Monday night, stocks held strong yesterday. Both parties are drafting plans and it looks like Sen. Reid (D) will get the first shot when the House votes tomorrow. As I mentioned yesterday, the entire process will come down to the final hour. At a time when the President should be mediating, he has inflamed Republicans. The House and the Senate are divided and they desperately need his leadership.

Stocks have been very lethargic this week. After a large decline on Monday, they have not been able to recover. Decent earnings and economic news has not been able to overpower credit fears. China's GDP and industrial production, initial claims, PPI and retail sales were all "market friendly". Earnings from J.P. Morgan and Google were excellent. The market has tried to rally on the news, but late day selling has erased the gains. The biggest development has been a spike in Italian interest rates. Moody's and Standard & Poor's are considering a downgrade.

Last week, stocks continued to drift lower in the absence of news. The downward momentum started two weeks ago and buyers are waiting patiently for signs of support. The SPY has broken through 130 and 128. Those levels are significant, but major support lies at 125. This is a "quadruple witch" and there will be position squaring. I am expecting a choppy week with light trading volumes. Economic conditions are starting to soften, but the backdrop is not dire enough to justify a major selloff. We added jobs in May and this was the first weak Unemployment Report this year.

IT’s late so I am keeping it short tonight.
The market pushed higher today and is now nearing a short-term overbought state.
China, Gold Miners and Real Estate have all moved into short-term overbought extremes so I would expect to see a short-term reprieve in those three ETFs over the next 1-3 trading days. All three ETFs [...]

This morning, the S&P 500 fell 12 points on the open and after two hours of trading, we are at a standstill. The price action during the final 30 minutes of trading last Friday was very weak. Initially, I thought it might be expiration related, but given this morning's decline, it could be something more. As I have been mentioning, there are two events that could spoil this rally. One is a credit crisis in Europe and the other is a slowdown in China. Over the weekend, Standard & Poor's lowered its debt rating for Italy.

The High-Probability, Mean-Reversion Strategy continued its success today as the strategy triggered another good trade. This time it was the SPDR S&P 500 ETF (SPY). SPY moved into a short-term extreme state on Friday so I purchased a few puts per the strategy guidelines. Today, I was able to sell them for a decent 7.6% [...]

It has been a strange few weeks in the market.
We had several trading days of strong resistance in the S&P 500 (SPY) and have basically sold off since the beginning of earnings season. Is it me, or does the market almost seems too predictable at the moment.
Will the market truly be this simple to predict [...]

The holiday-shortened week started with the market in a short-term overbought state. Couple the aforementioned with the seasonally bearish trading day that typically occurs  immediately following options expiration and one can quickly see why a short-term decline seemed likely.
However, no one could have ever predicted the madness that occurred in Libya.
The violence in Libya led [...]

Last Friday, the market opened on a positive note. It was able to shrug off a dismal initial jobless claims number, weaker than expected durable goods orders and a "soft" GDP. By midmorning, buying dried up and profit-taking set in. Japan's debt rating was lowered by Standard & Poor's and unrest in the Middle East spooked investors. As I've been mentioning, bullish sentiment has been off the charts and the market was overdue for a correction. Speculators need to be flushed out before the market can push higher.

This morning, stocks are testing the downside. The move is earnings related and expectations might have been a bit too optimistic. IBM, Apple and Western Digital posted solid numbers and those stocks are trading higher. Tech needs to lead this market higher. Overall, semiconductor demand was good, but there are concerns of an inventory overhang. Goldman Sachs, Wells Fargo, U.S. Bancorp and Northern Trust released earnings this morning. Trading revenues are down at most investment banks and that is weighing on those stocks.