The summer trading doldrums have arrived, and our current market analysis indicates that long-term investors lack conviction. As a result, traders are pushing the S&P lower in the morning and covering into the close, stifling market volatility — albeit deceptively. However, there are underlying concerns that suggest we shouldn’t be complacent.

The market also appears to be trading as if the leveraged and fast money set is net short. The S&P closed the week right at its 20-day moving average and held the 4098ish level twice, while the rejection at the Wednesday high of 4154.28 occurred at the key .50 fibo for this bear market at 4155.10. 

It’s a mug’s game trying to predict short-term market moves, but let us humor you going into the weekend. We suspect that next week, the recent market low at 4098.92 will break, and the S&P will test its 50-day moving average at 4057 soon, and very soon. If the 50-day moving average breaks, prepare for a summer vacation visiting the 200-day moving average at 3974.61.

On the upside, this week’s high and .50 fibo at 4155 is now the key resistance level to watch,   

Firm convictions held loosely.    

Stay frosty, folks.