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MV Weather Report: Market May Melt Up in the Heat of July


Rain or shine, we review the day's biggest stock stories.

Summer season has officially begun: Today was one of the slowest news days of the year. The biggest stories: Allen Stanford got indicted, Apple's(AAPL) new iPhone went on sale, and Research in Motion (RIMM) released earnings last night.

Today on the Buzz and Banter, Dr. Doug Hirschhorn gave his thoughts on why this summer should be particularly slow:

"Professionals are Risk Averse: Major players in market are still licking wounds from last years losses.

"Government Mish Mosh-Lots of meetings, lots of talks on rebuilding, lots of unanswered questions….leads to too much uncertainty for professionals to build an investment theme based on significant catalysts.

" The Risk/Reward Profile Stinks: Violent, but low liquidity moves are likely. When less players are in the mix that means less buyers and sellers. This can cause sharp drops in prices on little or no news. For the professional this means that the risk/reward profile for his trades is not favorable and as a result, the best trade is to take a vacation and sit on the sidelines for now.

"The markets are created by people. People have lives and families. Summer is typical vacation time for many or long weekend trips to summer homes. "

As for the S&P 500, it was a pretty rocky day. After an initial thrust higher the market sold off. The S&P closed at 921 up 0.30% . Overall the S&P closed down for the week. It was the first lower close on a weekly basis in four weeks.

In the coming weeks, traders will be focusing their attention on second quarter earnings. The market has made an amazing move since the low's in March but investors will get a great idea of where companies stand once earnings start pouring out in the next few weeks.

On today's Buzz and Banter, Professor James Kostohryz gave his take on what to expect in the coming month.

"I expect the flow of economic and corporate fundamentals will remain positive thru July. However, it is the reaction to news that is important, and recently, the market has been behaving in a manner that seems to be saying, "good news is old news."

"A melt up beyond 1000 on the S&P 500 is still very possible. This can occur if the market can capture the 930 area prior to the end next week. This will place the market in a position to vault over the 950 area based on corporate profit catalysts. In this scenario, I expect that the market will catch a "second wind" above 965 and move to 1000 and beyond.

"However, if the market is not able to capture and sustain itself above the 930 area next week, I expect that the positive catalysts will merely be enough to retest the 950 area where the market may "exhaust" itself in a distribution pattern."

The weekend is finally here. Tonight, MVHQ will be heading back to the 60s for Toddo's hippie-themed birthday party. Pictures to follow.

Have a great weekend!
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No positions in stocks mentioned.

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