Unfortunately, the dismal attitude we conveyed last week, was fulfilled with one of the worst weeks the market has had in some time.  The S&P 500 has fallen almost 15% from its April highs and is now below all of its moving averages, including the 200-day moving average.

Confusion continues to reign across the global marketplace. If there's no safe place to invest, does that mean you should invest nowhere? Or should you invest where it's relatively safe?

To put things into perspective, let's start with the backdrop to last week's market behavior.

It was a wild ride last week and perhaps the worst week the markets have seen since we began publishing this newsletter in 2004.  But today the bulls stampeded and the shorts ran for cover as the S&P 500 gained +4.4% for the day!

This week’s economic calendar features two bellwethers of consumer confidence (one on Tuesday and one on Friday), the FOMC announcement on interest rates on Wednesday, the weekly jobless claims on Thursday, and the quarterly GDP growth rate on Friday.  But it is unlikely that these numbers will have much of an impact on the market this week.

This week should be another interesting one, but it’s hard to say whether it can match the market’s behavior last week when it donned rose-colored glasses to view four days of mixed economic data.

It has been a week of sparse market-moving news, but what news there was continued to be generally supportive of the market’s slow growth recovery. Remarkably, volatility continues to be very low. Unlike the 6 to 10% gyrations (in both directions) of late 2008 and early 2009, we’ve seen very few days this year when the market has moved more than 1% in either direction.

The market continued its slow but persistent trek upward, inching along as it did during the holiday-shortened past week. In fact, the S&P 500 set an 18-month high today at 1187.73 and closed very near the high.

The market continued to inch ahead today, with the S&P 500 taking another aim at the 18-month high of 1180 which it reached last Thursday before backing off a bit on Friday.  The only thing nudging the market forward seems to be the lack of anything really negative. The economic releases over the past week and today were either at or slightly above projections, and we seemed to have dodged the bullet on a couple of portentous events.

Despite the global gloom that continues to cause significant concern about economic recovery virtually everywhere, the market pushed right through the resistance wall last week, threatened to give it back on Friday and this morning (Monday), but then continued forging ahead today.