Markets Blink in Game of Chicken

Everything was going swimmingly on Monday, until... traders apparently remembered that this was Fed Week. All eyes on the Fed. Nothing happens until Ben Bernanke and the FOMC issues its directive.

The selling began about noon and really got rolling in earnest around 2:00, after the Dow was up more than 120 points earlier in the day.

Dow 13,352.05 -8.21; NASDAQ 2,577.08 -11.88; S&P 500 1,497.74 -4.82; NYSE Composite 9,807.18 -41.79

It's a foolish game of chicken the markets are playing with the Fed. The very worst thing the Fed could do at their Wednesday-Thursday meeting this week is raise interest rates 25 basis points (1/4%). They're not going to do it. Despite strong inflationary signals, there are also signs that the economy has slowed to a crawl.

So, what's about to occur? Nothing much. It's a week of noodling and doodling over numbers that, in the larger scheme, are rather mundane and inconsequential. Further, with Independence Day falling on Wednesday of next week, the markets will find it difficult to manage any kind of momentum.

Second quarter corporate earnings reports will begin trickling out the following week, so we could be trading in very sideways fashion for the better part of a month before any significance can be garnered from earnings and profits reports.

For the day, losers outdid gainers by a better than 2-1 margin and new lows finally got the edge on new highs, after days of closing the gap, 213-177. The margin is small, as are the chances for a heavy selloff.

To amplify just how much nothing is happening, crude oil futures rose an entire 4 cents to $69.18. More importantly, gold was off another $2.30 to $654.70 and silver is testing a multi-month low at $12.88, losing 14 cents on the day. There really is a bear in the mine.