Lazy Days of Summer

Summer afternoon -- summer afternoon ... the two most beautiful words in the English language.
-- Henry James

After some better-than-expected economic news in China, the market was indicating a stronger open with commodities leading, but the ADP jobs news is a bit worse than expected and that is taking us back down again.

The challenge for the next few days is that the after a good second quarter, a lot of folks are ready to take a break for the Fourth of July holiday, but employment news today and tomorrow will push us around and the thinner holiday trading always invites some aggressive trading in a few places. Volume should be very thin and volatility will keep it tricky.

Neither the bulls nor the bears have been able to generate any really strong momentum lately. The bulls produced a nice bounce off the key moving averages of the S&P 500 but weren't able to cut through key overhead around the 930 level. On the other hand, the bears were even more inept at capitalizing on the failure at the level. They pushed us down a bit yesterday but we rallied a bit in the final hour and didn't do any real damage with the low-volume pullback.

So that puts us in a trading range, and with a holiday beckoning, we are likely to stay in that range. Under the surface, the main theme is likely to be energy and commodities due to the continued economic strength in China. The dollar is also showing some weakness, and that is going to help the energy/commodity trade as well.

I don't believe the market is going to make much progress moving through the 930 level in the near term, and I'm looking for it to eventually test the lows of June, but I'm not looking to make any big bets in this pre-holiday trading. We'll see if we can spot what the hot money is focused on and trying to knock out some trades in that area.

The bigger picture is going to be a little murky while folks focus on some summer fun, and there is no point in trying to press a theme when no one really cares too much right now.

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Know what you own: Volume leaders in Tuesday's trading include SPDR Trust (SPY - commentary - Trade Now), PowerShares QQQ Trust (QQQQ - commentary - Trade Now), Bank of America (BAC - commentary - Trade Now), iShares Russell 2000 Index ETF (IWM - commentary - Trade Now), Citigroup (C - commentary - Trade Now), Ford (F - commentary - Trade Now) and SPDR Gold (GLD - commentary - Trade Now).

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James "Rev Shark" DePorre is the author of Invest Like a Shark: How a Deaf Guy with No Job and Limited Capital made a Fortune Investing in the Stock Market. He is founder and CEO of Shark Asset Management, an investment management firm, and he also operates sharkinvesting.com, an interactive online community that serves and educates active investors. DePorre holds business and law degrees from the University of Michigan, is a member of the Michigan Bar Association and a former tax attorney and CPA. He lives in Anna Maria Island, Fla., with his wife and two children. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Rev Shark appreciates your feedback; click here.