The major indexes ended up modestly lower last week in what turned out to be a rather quiet week of trading.  Aside from a sharp rally on Wednesday, the equities markets traded with a negative bias.  There seemed to be a number of factors behind the lackluster action of stocks, including summer vacations, caution ahead of next week's FOMC meeting, nervousness over earnings warnings, and another rise in long rates.  Overall though, there wasn't much damage done as most stocks seemed to spend the last five days just marking time.  Energy shares were the strongest group, while underperformance was seen in Healthcare names.

Moving forward, the big market mover for the week ahead will be Thursday's Fed announcement.  At the moment, it's unclear what the Fed will say following a widely expected rate hike.  However, the uncertainty could be cleared up with key Housing data due out Monday and Tuesday.  While there is a lot of talk how the Fed fears inflation, I would guess that Mr. Bernanke's biggest fear is Housing.  The lending behind the current Housing market is simply too vulnerable for the Fed to be comfortable maintaining a hawkish posture beyond Thursday's meeting.  With that said, I feel it's best to maintain a long bias in my trading.  Patience may be required, but eventually I would expect to see another sharp "Fed is done" rally.

Daily Pivot Points for 6-26-06

Please feel free to email me with any questions you might have, and have a great trading week!

Chris Curran