The market has been flat for 8 straight days up yesterday and flat again today. That’s very unusual.
To have a rally, go flat and then add to the rally is usually a good thing. Pessimists will point to not breaking through the April highs that are only a couple points above here. Personally, I favor the optimists here. The trend is up.
“Longer term” – say the next month or so I worry about whether 1) Bernanke will actually come through with another round of quantitative easing (I don’t think he will but many disagree) and 2) whether the Europens will themselves come up with a form of quantitative easing.
The lack of much clarity on either point is what has led to this stalemate. The next 4 weeks should provide answers.
The dates to watch are:
8/31 – Ben Bernanke speaks at the Jackson Hole Economic Policy Symposium, where last year he announced a second round of quantitative easing. ECB president Mario Draghi is also speaking.
9/12 – German High Court rules on the constitutionality of the bailout agreement done earlier this year. A negative vote would be really bad for European stocks and ours too.
9/13 – Federal Reserve Board meeting ends, the last Fed meeting before the election at which Bernanke could announce a major quantitative easing program of some type
9/16 – European version of the Federal Reserve meets
Stocks should drop if no quantitative easing is announced unless the economic news turns up or Europeans open their wallets again