Did somebody give the market gods a bottle of Lunesta? Market action has not been this somniferous since the week after Christmas. My only guess as to the cause of all this tranquility is that the big players are out vacationing. The theory would help explain why a market that seems to want to go down won't go down: the smart money isn't around to do any selling. Perhaps as summer winds down, an acceleration of volume will bring some earnest selling.
Beneath the surface a few interesting movements were taking place. Brokerage houses were down firmly for the second straight session, as were mortgage lenders. Bear Stearns and Goldman Sachs both shed about a percent. Weakness in broker shares tends to be quite foreboding for equities in general. While it is not quite time to declare a downtrend, their charts are looking quite toppy.
Mortgage lenders were hit harder as companies like Countrywide Financial and New Century Financial lost 2.5% and 5%, respectively. Washington Mutual, a lender with huge West-coast exposure, fell 2%, and Novastar, a company focusing on riskier clientele, shed 4.5%. Perhaps investors in these companies were spooked by the recent words of Countrywide CEO, Angelo Mozilo: "I've never seen a soft-landing in 53 years, so we have a ways to go before this levels out. I have to prepare the company for the worst that can happen." Doesn't sound like the rosy, care-free scenario in which the clowns at our central bank would have us put faith, does it?
Disclosure: Short BSC, WM; Long NFI Puts