Market's Search for Direction Could Last All Summer

traders stock marketIf it's not one thing, it's another with the stock market these days. Take Friday's disappointing retail sales data. The numbers sent the Dow tumbling in early trading. That is until a better-than-expected reading of consumer sentiment helped equities pare losses... and then leap into the green in the last 20 minutes of trading.

And yet wasn't it just Thursday that traders took the news out of China, Japan and the European Union to send the Dow up more than 273 points? Was the outlook for equities so radically different less than 24 hours later?

Of course not, say traders on the floor of the New York Stock Exchange (NYX). The market is searching for direction, meaning equities will continue to react spastically to every scrap of news and data -- and no one knows how long that will last. Jason Weinberg, a trader with Seaport Securities, expects the Dow to stay within a fairly tight 300-point band for the summer or longer.

John Stoltzfus, market strategist at Ticonderoga Securities, is neither a bull nor bear at this point. There are simply too many forces at play to make a definitive call on equities as a class in a post-credit-bubble environment.

"The question no small number of investors, traders and speculators is likely asking themselves today is: 'Are the interim rallies we've seen since the recent correction began funded by reality or perception -- a mix of the two -- or is it just players playing?,'" Stoltzfus told clients in a note Friday.

The answer, unfortunately, is probably some mix of the three, Stoltzfus says. As volatile as the market has been of late, it hasn't gone anywhere in six months. The bottom line: This is a traders market. Anyone with longer horizons would do well to tune out the daily noise.
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