Dog Days Arrive Early

Did somebody say "woof"?

After three years of gut-wrenching declines followed by nine months of mind-blowing gains -- interrupted in the first-quarter by another sickening slide -- the market could use a rest. Certainly, most participants would embrace a period of relative tranquility. Traditionally, such a period occurred in late summer as investors fled the sticky confines of lower Manhattan for the Hamptons or Nantucket or other seaside destinations.

Modern communication capabilities and "fast" markets have often forestalled the arrival of these so-called dog days in recent years. But an increasing number of market participants are expecting them to arrive soon, if they haven't already. Most observers believe the rally from the mid-March lows has peaked, but they're looking for trendless, sideways action for the foreseeable future, as opposed to a big swoon.

Last night I mentioned Scott Bleier of HybridInvestors.com being so inclined. Rainsford Yang of Astrikos.com, a Web site dedicated to market-timing, offered a similar view Wednesday, appropriate on a day featuring dogged action.

Major averages overcame midday weakness to end higher and near intraday highs. But the day was pretty uneventful and final tallies modest. The Dow Jones Industrial Average closed up 0.4% to 9194.17; the S&P 500 gained a fraction to 988.60; and the Nasdaq Composite rose 0.8% to 1719.15.

The Comp's outperformance was fostered by optimism about results from Internet names Amazon.com (AMZN Quote - Cramer on AMZN - Stock Picks) and Ask Jeeves (ASKJ Quote - Cramer on ASKJ - Stock Picks), as well as biotech bellwether Amgen (AMGN Quote - Cramer on AMGN - Stock Picks). Blue-chip proxies were restrained by notable weakness in AOL Time Warner (AOL Quote - Cramer on AOL - Stock Picks).

Trading volume was solid, with over 1.3 billion shares on the Big Board and 1.8 billion over the counter, but market breadth favored advancers by a narrow margin in both.

Release the Hounds

Wednesday's gains notwithstanding, the market looks "vulnerable" in the short term, Yang declared, citing Tuesday's close of 20.98 by the CBOE Market Volatility Index. (The VIX fell another 2.6% to 20.44 Wednesday, its lowest close since May 23, 2002.)

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