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"All things in moderation"

-- Homer

The market's long meandering odyssey through the first half of the year is over. But, whether the end of the first half will mark an end to the sideways action remains to be seen.

We will be watching to see if the cluster of turning points

mentioned Wednesday exerts an influence as market participants return from the July 4 holiday.

The stage is set for the market to respond. Enter earnings. With the first rate hike in four years and the first step toward a new government in Iraq a

fait accompli

, the focus will be on earnings. Will earnings provide the catalyst that the broad body of stocks needs to join the ranks of those strongly trending issues?

Likewise, the first half, and specifically Wednesday's


TheStreet Recommends

move, appears to mark the end of the long 22-year odyssey of disinflation. The beginning of the end of that long odyssey, in and of itself, was underscored by the Fed's intensive campaign of excess accommodation as the fear that disinflation would turn to deflation enveloped the financial market and the Fed in 2001.

These long cycles do not turn on a dime. They do not turn from one day to the next. The transition is not seamless as expectations and data points overlap one another.

It is my impression that the strongest/quickest rate-cut campaign on record was two-prong:

    1. The specter of the hard landing in Japan after its equity bubble burst.
    2. The specter of 9/11 and the outbreak of terrorism in the homeland.

Despite the Fed's excessive accommodation and the potential for recent inflationary expectations to become unruly, do not expect the Fed to orchestrate a recession for two reasons:

    1. In the face of the threat of continued terrorism, a strong economy and the accompanying strong consumer sentiment are necessary to fight a war.
    2. Then, of course, there is Greenspan's legacy.

Let's tip our hat to the Maestro as his campaign of accommodation was clearly enunciated and despite a "new era of geopolitical risks," he prompted risk-takers to ... well, take risk.

If the chairman had not acted as aggressively after 9/11, the economic contraction could easily have persisted far longer and far deeper than otherwise. Apparently, Mr. Greenspan was aware of the old saw that when you are in a hole, stop digging.

When I first got into this game, one of my mentors told me that periods of disinflation are good for paper assets -- such as stocks and bonds -- while periods of inflation are good for hard assets. If it were only that easy. There are so many wrinkles in the marketplace that it could be the poster boy for a Botox campaign. I wonder what my mentor would say about the past four-year move up in real estate prices. Since the 2000 bubble top in the stock market, many areas have seen 25% annual increases in home prices.

It is my impression that one of the reasons there was no inflation to speak of in the 1990s was because all of the inflation was in the stock market. When the bubble burst, money sought higher ground, so to speak.

Disinflationary and inflationary crosscurrents take time to transition. It takes time for market participants to make up their minds. Their conclusions depend upon conditions as they come. Forget the forecast. The rubber meets the road every day. As traders, that is how we make money -- day by day. That being said, the next year to 18 months should be an interesting crossroads.


: The market certainly knows 1136. The

S&P 500

cleaned above and below that level all Wednesday morning. Then the S&P did the FOMC Cha Cha Cha. After the 2:15 p.m. EDT Fed pronouncement on rates, the S&P exploded, pulled back and then took off again. It looked like we would get a meaningful close over 1140. But naturally, the S&P walked back to close exactly at the breakout point at 1140.

Be that as it may, money managers love stability, and the prospects for growth that is not too hot and not too soft, prompted by Fed moderation, should provide a lift going into the third quarter.

S&P 500 10-minute

Jeff Cooper is the creator of the Hit and Run Methodology and the author of the best-selling books

Hit and Run Trading (The Short-Term Stock Traders' Bible),

Hit and Run II (Capturing Explosive Short-Term Moves in Stocks), as well as a video course, Jeff Cooper on Dominating the Day Trading Market. He also created the Hit and Run Nightly Reports and co-founded a trading markets Internet site.

Mr. Cooper is also a principal at Mutual MoneyFlow Management, a money management firm that is a registered investment adviser. MMM and its affiliates may, from time to time, have long or short positions in and/or buy or sell the securities or derivatives thereof, of companies mentioned in Mr. Cooper's columns. In such event, appropriate disclosure will be made. None of the information contained in Mr. Cooper's columns constitutes a recommendation by Mr. Cooper that any particular security, portfolio of securities, transaction or investment or trading strategy is suitable for any specific person. To the extent any of the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. While Mr. Cooper cannot provide personalized investment advice or recommendations, he welcomes your feedback at has a revenue-sharing relationship with under which it receives a portion of the revenue from Amazon purchases by customers directed there from