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It's a Rangebound Market Unless ...

It happened again. Europe closed, stocks here dropped down a bit, and the dollar rallied ... commodities dropped. This is the second day in a row this has happened. Traders speculating that there was a sell program in Europe selling risk a the close of their day, seeking to be flat over the weekend.

So where do we go from here? Earnings are largely over (retailers excepted), economic news is light next week (except for retail sales), Chinese New Year starts next weekend, so news flow will be light out of there. That leaves sovereign risk issues and Washington. We still don't know exactly what health care will be, what the tax structure will be, what the regulatory issues for financials will be.

One thing everyone agrees on: the character of the market has changed. We are oversold, but most ACTIVE traders I have spoken with are inclined to BUY DIPS AND SELL INTO RALLIES.

That argues for a rangebound market, unless the news out of Europe worsens dramatically.

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