What Will Break the Market's Malaise?

stock market traderIf it feels like stocks haven't gone anywhere in months, well, that's because they haven't. For all its daily gyrations, the S&P 500 ($INX) has been trading in a tight range around 1,080 since the middle of May. Step back a bit farther and you'll see that stocks have essentially moved sideways for almost a year. The S&P 500 enters Tuesday's trading at almost exactly the same level it held on September 24, 2009.

Furthermore, despite some notable late-day fades -- for example, the Dow Jones Industrial Average ($INDU) was unchanged for most of Monday's session before skidding 40 points in the last half hour -- volatility has been tepid for weeks, as well. The S&P Volatility Index ($VIX), also known as the "investor fear gauge," has been slumbering around 25 since early July. That's significant because a move on the VIX above 30 brings short-term traders into the market, says Cort Gwon, director of trading strategies and research at FBN Securities.

True, low volatility and light volume aren't unusual at this point in August. After all, traders go on vacation, too. But what will it take to break the market's malaise once the Street is back -- and supposedly ready and rested?

Kenny Polcari, a trader with ICAP, an inter-dealer broker, doesn't see the market making a definitive move to the upside until weekly jobless claims data starts to show regular improvement. As long as 450,000 to 500,000 new people are filing for unemployment every week, the market is right to worry about the future of the recovery, he says.

Then there's political uncertainty. Jason Weisberg, a trader with Seaport Securities Corp., thinks the market will continue to mark time until the November mid-term elections are past. After tackling health care reform and financial reform, there's a perception among many on the Street that the Obama administration is anti-business, Weisberg says.

Finally, the market is forward looking; it's trying to price itself for business and economic conditions six to nine months away. No wonder stocks are stuck in a rut. Federal Reserve Chairman Ben Bernanke has called the economic outlook "unusually uncertain." And the market has replied: No kidding.

For more on what might break the market's malaise, see the video below:

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lulu0510

There is no doubt that the market will improve right after the Democrats loose the House and Senate this November. Also after Pres Obama finishes celebrating Ramadan in secret at Martha's Vineyard we may see him take a turn to the right ala Bill Clinton to bolster his falling poll numbers.

August 24 2010 at 4:33 PM Report abuse +1 rate up rate down Reply
Drewboy60

Close down the Obama circus and tell them to get out of the way.Obama produces these: ???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????

August 24 2010 at 3:45 PM Report abuse +2 rate up rate down Reply
Annalee

When we get a brain in the White House and more brains in the senate. BUY AMERICAN PRODUCTS...NOT FOREIGN.

August 24 2010 at 3:10 PM Report abuse +2 rate up rate down Reply
1 reply to Annalee's comment
Drewboy60

Very hard to find American products these days. My mom bought me a new shirt as a gift and it was made in Vietnam.

August 24 2010 at 3:43 PM Report abuse +1 rate up rate down Reply
joe75616

In 2001 the white house convinced corportions that outsourceing was good for america and away manufacturing went all over seas huge profit margins with none of the risks, build products for pennys per unit make 90% percent profit when it is sold back here in the USA, get around all that red tape and we will give you a tax brake for doing it, just think of it no medical insurance, no workers comp, you dont have to provide benfits just make money, remember buy american, then turn it over the label will say made in some 3rd world coutry for workers making .50 censt an hour and a bowl of rice ITS TIME TO BRING JOBS BACK TO AMERICA BOYCOTT FORGIEN MADE PRODUCTS

August 24 2010 at 2:35 PM Report abuse rate up rate down Reply
bhawkes328

OBAMA NEEDS TO BRING GEORGE W IN A VICE PRES... THEN WE WILL HAVE HALF A BRAIN IN THE WHITE HOUSE

August 24 2010 at 2:21 PM Report abuse +2 rate up rate down Reply
bhawkes328

THEY HAVE GONE DOWN IN THE LAST FEW MONTHS.... AND WILL GO LOWER

August 24 2010 at 2:18 PM Report abuse +1 rate up rate down Reply
yamobthere07

Captain John , you and your friends should be driving minivans. You wouldnt know performance if it hit you in the head.

August 24 2010 at 2:11 PM Report abuse -1 rate up rate down Reply
yamobthere07

Ill buy American cars that are half the price and will outperform any of the import junk. This is fact , Cadillac CTS V , Corvette , Cobra. Go buy a 300 series BMW for 35 to 40 k , what a garbage bucket. 500 series is the same junk. Ill blow by you in a car that is a third of the money ,FACT. The problem is 90% of the morons you see driving a benz or bmw dont even know what motor is in it , lol. Obnoxious status symbols that dont perform for the money.

August 24 2010 at 2:09 PM Report abuse rate up rate down Reply
yamobthere07

To the moron saying , I will never buy an American car , you are clueless. Go ahead and buy your overpriced s buckets like mercedes and bmw ,

August 24 2010 at 2:02 PM Report abuse -1 rate up rate down Reply
Captain John

Kenny Polcari, a trader with ICAP, an inter-dealer broker, doesn't see the market making a definitive move to the upside until weekly jobless claims data starts to show regular improvement. As long as 450,000 to 500,000 new people are filing for unemployment every week, the market is right to worry about the future of the recovery, he says. Then there's political uncertainty. Jason Weisberg, a trader with Seaport Securities Corp., thinks the market will continue to mark time until the November mid-term elections are past. After tackling health care reform and financial reform, there's a perception among many on the Street that the Obama administration is anti-business, Weisberg says. Obama, anti-business? Ha Ha Ha no kidding! Unless you are making windmills and solar panels and he has an interest in the business, then he is not anti-business!

August 24 2010 at 1:58 PM Report abuse +5 rate up rate down Reply