Who Shot the Sheriff?

Somebody must have shot the Sheriff because there isn't anybody watching over the market. I think it has gone off its meds because it is definitely developing multiple personalities. Of course the market usually have different moods, but on an intraday basis, it can start one way and end totally different. I think we have reached some kind of tipping points. There isn't a big enough crowd to move us one way or another. We have enough issues here at home. We have some economic data showing us that corporate earnings are slowing and that the economy might be starting to cool off, but then we still have some data showing that we might still have inflation worries. I guess that means that everything will be expensive and we'll all be unemployed. Well...probably not that bad, at least I hope not. However, it is something interesting.

I think that there is absolutely no way the Fed will change interest rates at the FOMC meeting next week. If for anything, because who in the heck knows where to move them too. We have inflation worries on one hand and housing issues in the other. Certainly, there is more than just those two issues, but I needed two for an example so there you are.

Actually, I think that we are at a transition point at the moment. We are in between a rapidly growing economy and a slowing one. I don't think we are going to continue to go gang busters, but I don't think we'll go into a recession either. We are seeing information that can lead us to either side, but I think the confusion simply means that we are starting a new of the cycle.

We seem to be rather range bound lately, but I think that will easily end when ever something comes along to give it a reason to move. A non-trending market is like a trending market, by way of it is what it is until it isn't. We have no idea where the economy is going from here and the market is equally confused.

Even with all of the stuff going on here, a lot of our ebb and flow seems to be dependent on the Yen. I heard a stat on CNBC that said that according to a study done by one of the big brokerage houses that our markets have had a 90% correlation with the Yen in the past week or two. Actually I think that was more last week since we have had a little more economic data this week.

Now for the final act, of the week, CPI. After the PPI was released everybody just stared at each other waiting for somebody to make a move and nobody did. So, everybody agreed that we would wait for the more important CPI before we make a move. So tomorrow will be a duel. I have no idea if this is accurate, I actually am skeptical, but they said that there has never been a down 3rd Friday of the month. Even without that "fact" tomorrow should be wildly interesting. Quick summary: volatile past two weeks + mixed economic data + range bound markets + carry trade + sub-prime + option expiration= ??? Some of these might not directly affect tomorrow, but they will all definitely be on the mind of traders. So find your trades, set your stops, and good luck.