Unless some major news item occurs that indicates a change, summer doldrums are on us and the economy is on cruise control.
I just heard the subprime mortgage mess could cost $52 Billion. Sheesh, that's just like one big bankrupcty spread over the whole US. For a multi-trillion dollar economy, $52 billion is just a mosquito bite. These perma-bears sure are over-screeching that one.
Most CDO and MBS holders hold to maturity. All this screeching about mark-to-market losses means little. So what matters is real losses, not trading losses.
PPI and CPI numbers today and tomorrow are important - particularly the CPI. A stable or downtick in year-over-year core CPI would be good.
Some consolidation here would be fine for the S&P and Nazz. I think we grind up like mid-March to late May, or all last fall & winter until Feb 2007. The bears aren't likely to give up and their shorts will be bought by real dip buyers. When the bears cover, we grind up as few sellers are higher except the bears. And the cycle repeats as before.