Markets to "Nowhere since start of May".....

Markets are dealing with many "unknown about economy"

@ the start of May S&P 500 was @ 900 area...after 60 days of "hopeful trading" we are @ 896.42....this proves that markets are "going nowhere fast"......

Since May low of 882.88 we hit 930.17 back down to 878.94 back UP to 956.23 Down again to 888.86 then UP to 946.21 and then Down again on Thursday to 896.42????

So.....why we are stuck in 880 area for over two months?

Economy "turnaround" time table is NOT known to markets....thus a "range bound trading"

Markets are waiting for some "concrete evidence" that we are on the road to economic "improvement"???

YES...there are some "pulse" in the economic data but it is far from "healthy".....

Markets have brought many stocks down to their major support levels......

This market is giving the impression of "reacting DAILY to news"...which could range from economic data,oil prices,earnings or statement from fed/treasury of many countries......

So....where are we heading in terms of trading range?

I believe that support lies in 870 area & resistance lies in 950 area....which means MAX 9.2% UP move from support......

So if you are planning your trade or investment there is a very good chance that we will remain in this"narrow" trading mode until October......

IF you are lucky...then your stocks MAY outperform S&P 500.....BUT in any test of support SOME stocks MAY underperform S&P 500.....

As long you accept this "probable trading scenario"..you CAN come up with your OWN "survival plan".....narrow range bound markets are generally very painful.....

I "firmly believe that besides fundamental analysis RSI range for stocks will guide us to act rational"

Here is RSI as of close on Thursday for my *portfolio & other stocks :

*MRVL..50.47
*SOL....49.84
*TLM...40.11
AAPL..55.62
RIMM..40.38
GOOG..44.50
BIDU..53.68
FSLR..37.42
STP...57.01
TSL...64.23
YGE..57.09
IPI...46.59
AGU..40.15
POT..44.88
V.....37.86
MA..49.51
GS..51.03
GE..33.73

Now ..the tough part is to accept the relative "under performance by some stocks" as i have grouped them in same industry.....higher the RSI better IS the performance/prospect..a simple "reality" which we all chose to ignore as we fall in "love" with our holdings.....so pay attention to RSI...it MAY be telling you MORE than what you care to know.....

Narrow range bound CAN be profitable if you manage the range.

Good luck with your OWN homework & comfort level.

Stay diversified in different sectors.

BLOG does NOT give buy or sell.

Saleem