Summer Time Sadness

The weekly follow through was as dramatic as we thought, with the outside hours low first thing Monday, proving to be a near low for the whole week. In fact the finish on Friday was also not too dis-similar, making the week basically unchanged. This could suggest a base being formed around this level, however, the JP Morgan news on Friday is worrying. In an apparent breach of both Volcker and Dodd-Frank rules, it appears yet again that the  'too big to fail' financial institutions are speculating and hiding behind the story of a 'hedging strategies' position. After only three years since the world faced financial Armageddon, it seems they have still not grasped the basic principle of risk. With Europe turmoil now looking ever more current, how many other similar speculations are being held by the financial industry, that could bring some summertime sadness in the following few months. We feel the market at the 1350 level, is in mid-month mid-point position, between a 1387/90 high and a 1313/28 low. This is backed up by the volatile price action this week that ended roughly where it began. With last weeks gains banked, we are holding a watching brief at present until a more oversold / overbought position presents itself.