SUMMARY:
- This is Wednesday, market was up Tuesday, so it must be a down day as the indices cannot get away from the top of the range.
- Market performs decently until the news pendulum swings negative on Europe, US outlook.
- Oil imports fall to a 15 year low. And the economy is heating up?
- CPI doesn’t show the same heat as the PPI.
- Housing starts jump 15% but for the less impactful apartment market.
- A heck of a fight at the top of the range.

The inanity of a news-controlled market. 

It appears that the tenor of the news out of Europe, China, and yes in the US drags the market up and down by the nose. That is the appearance as stocks bounce back and forth this week with 2% moves either way on alternating days. Thus Monday was lower after the Friday surge on European good cheer when Merkel splashed cold sauerkraut on any quick resolution. Tuesday rebounded on, and this is my opinion, that trumped up story about a German/French deal. Then Wednesday it is clear from more German comments that was simply not the case. Call it a tennis match or call it a remake of the 1960′s comedy ‘If it’s Tuesday, this Must be Belgium,’ but either way this is one heck of a fight at the top of the range between the buyers and the sellers.

Wednesday the AAPL earnings overshadowed INTC’s solid showing as NASDAQ futures dragged on the rest of the market. DJ30 and SP500, less burdened by AAPL, held up decently but struggled nonetheless. Some solid housing starts, rising 15% (though multifamily units) helped push stocks off that soft open and into positive territory on the NYSE. That more or less held up through the session but there was no significant movement off of that open, just bouncing around the flat line.

Until, at least, the afternoon session. The Fed released its Beige Book that again threw out the obligatory ‘modest growth’ phrase, but added comments from companies complaining of weaker or less-certain outlooks for business conditions. On top of that, more words from Germany indicating a deal was not a done deal. Apparently Germany and France, the two largest economies, are in disagreement about how to proceed. How deliciously ironic as Germany and France fight again.

Ironic historically, but hardly helpful to the stock market. Stocks are trying to find a new catalyst. You would expect earnings to provide that. GOOG posted great results yet the market has not followed through to the upside. AAPL then missed, and that is not good for the economy. INTC was solid and its products go into many items. There are reasons for enthusiasm and reasons for concern. The back and forth action at the top of the range shows the indecision.

The action left SP500 below the top of its range. NASDAQ is testing back to its breakout, holding at 2600. Still a the lick log, still unable to give it a good lick at this point.

NASDAQ -2.01%. SP500 -1.26%. DJ30 -0.63%. SP6500 -1.93%. SOX -2.24%

THURSDAY

My goodness, Thursday already. Initial jobless claims still expected over 400K (403K), Existing Home Sales expected to fall a bit, the LEI (ho-hum), and the most important of the day, the Philly Fed. It is expected to halve its losses; NY PMI doubled expectations downside. Philly is important as a direction of the manufacturing sector that has led the ‘recovery’ and now the new downside.

Europe will be there as well as earnings. Lots to consider. All of this is getting factored into the daily action and thus the back and forth meat grinder the past few sessions. The buyers and sellers are grinding each other up and the market will make its move shortly. As noted above, I believe it is down given the trend of the economy (despite the recent upside bump), but I will say again, my beliefs are not the driver of the markets.

Thus we are positioned for the potential moves with current positions and we have plays on both sides for any further moves. Often in these situations the market will stretch the rubber band in one direction, appearing it is heading that way. Just as it looks free and clear the rubber band snaps back. The old false break I often reference. Might see some of that here. Still, there are those stocks, and many of them, that have formed the rounded bottoms and they are in position to move higher. It could be we get a further move upside where NASDAQ probes the 2010 levels before it turns.

Again, we see the break and move with it. NASDAQ has already broken its range and is testing. If it overcomes AAPL, holds the break, and moves up, that says a lot about its near term strength. Until then we watch the action, the leaders, and if they say ‘buy me,’ we pick up the positions regardless of gut feelings about where the economy and the market are going.