THE CALM BEFORE THE STORM?

The market just finished a week where it basically did nothing. If the chart looked flatter, I'd see it as a sideways move that was setting up for a move higher. Because it hit a higher high on Tuesday and had a bearish looking day on Friday, it could be a possible reversal. We are still in that key resistance area. As we hit that area last week, I started to to look for a catalyst that would either move the market higher or push it lower. There really wasn't any major news out there until Friday afternoon. On Friday, we started to see news out of Europe with France and Italy being downgraded. We also saw some bearish news out of China. We'll see how the market reacts to these news items tomorrow. The market hasn't been following any normal patterns lately. I've talked about the weakness in the previous market leaders and some of the bearish price action that has show up on several stocks. It feels like things are about to explode lower. The problem is that it is impossible to predict exactly when the break will start. There is a quote on Wall Street that I will paraphrase since I don't remember the exact wording. It says something like "the market can sometimes stay irrational longer that you can stay solvent". I really feel like this is an irrational market. There is no way that the problems in Europe (and Asia for that matter) will have no impact (or little impact) on our economy. It is only a matter of time before we see that impact. There is a reason why I have been preaching patience for the last few weeks. It is the smart thing to do. This could be the week that something happens. Option expiration is this Friday and the markets have been quiet...too quiet. We'll see if it is the calm before the storm.