The markets have remained volatile this week. Recent economic reports have largely been disappointing, particularly the latest housing market data. While certainly concerning, we don’t think enough evidence has accumulated to join the double-dip recession crowd at this point. Overall, the market seems to be digesting some degree of slowing in the U.S. economy. It may be a rocky summer as this process continues, with the market lurching in both directions on the latest news.
We wouldn’t be surprised if the market is largely range-bound between the February/May/June low of 1,040 on the S&P 500, and the January high of 1,150 for the next several weeks. If that happens, it would reflect a level of indecision among investors as they try to determine whether there’s more in the tank for this bull market, or if it’s time to take profits. That’s not a terribly exciting scenario for investors, but it may be what’s needed after the large swings of the past couple of years.
Chart: S&P 500 Index, with possible sideways trading range