An unusual calm day...

Stocks opened unchanged to higher but worked their way lower for the 1st 90 minutes of the day. From there prices stabilized and headed north. The highs of the day were made around lunch time and from there it was pretty much just sideways activity with prices coming back down a little bit. The final 30 minutes saw more selling and led the market back down and we finally closed in the red. (albeit marginally only)

It was a fairly narrow range bound day and when all was set and done the Dow closed with a loss of 6.81 points and the broader based S&P was down 1.26 points. (-0.08 qnd - 0.14 % respectively)

As you might remember, yesterdays economic report was the Producer Price report. Today it was its "little brother" which was released. The Consumer Price report (CPI) came in at a rate of + 0.1 % for the month of May. Analysts had on average expected an increase of + 0.3 %.

On an annual basis the report showed a decline of - 1.3 %, the greatest decline on an annual basis in the last 60 years.

What it means ?...pretty easy...no sign of inflation and deflation is also not a threat right now.

The CPI pretty much mirrored the PPI which was released yesterday. There seems to be little price pressure on both sides, the consumer as well as the producer.

Stocks took the report in stride. We climbed steadily throughout the day before falling back so it is clear that market action was rather subdued.

We still have option expiration coming up on Friday which should lead to an increase in volatility later this week. Today was certainly not the day big positions were moved.

I remain neutral stocks and look for a potential down side break out. If the Dow fails to hold the 8400 level we might easily slide another 200 to 300 points lower.

I would expect a bigger move sometime later this week...so...let's see what happens.

Until tomorrow,

Steve Benger