Flatlining

The range over the past 10 trading sessions has been 2153 to 2173, or less than 1 percent.  That is one of the tightest ranges I have ever seen over a two week period.  It tells you that the market has found a level where it feels comfortable at when optimism is high.  The question is what the range will be when that optimism goes down.  The optimism can hardly go higher from here.

We have a Fed meeting today and expectations are for nothing to change.  You know what I feel about the Fed.  I have been adamant that they will do nothing, lean dovish, and try to pump the markets higher for political reasons.  The notion that the Fed is apolitical is hogwash.  The Fed chairman is appointed by the President and approved by Congress.  They are also up for renomination every few years.  That is why you had that out of the blue, wacky, in your face QE from Bernanke in September 2012 even though the economy was fine and S&P at post 2008 recovery highs.  He wanted to goose the market higher into the presidential election to help his guy, Obama.

With a Fed that will be dovish till the presidential election, there will be no big downside catalysts.  The bears can only rely on the rally exhausting itself and pulling back based on overbullish positioning.  August also tends to bring weakness when there has been a summer rally.  So all signs point to a pullback over the next few weeks.

Initial signs of intraday weakness over the past few days are probably a warning sign that we will be going down soon.  If we do dip, I expect initial support around 2125-2130, the area of the highs in the  S&P in 2015.