The Big Picture For The Week Of June 11, 2006

There was a lot of commentary last week on CNBC Europe that volume would dry up during the World Cup. At different points in the selloff of the US market in the last few weeks there were a couple of days that afternoon selling was attributed to European buyers being done for the day.

While it is tough to attribute market action concretely to something like that it does raise some questions for the coming few weeks. Will a slowdown in Europe mean less volume here? If so, how much less?

This is could lead to one of several scenarios for US markets. Given the way the market has sold off in the last month I would think there would need to be a surge in demand to retrace what was lost. An event that distracts potential buyers could mean there is not much of a bounce for a while.

This does not have to mean more selling. A positive scenario for the next month might be less volatility for the next month, the market builds a base and after the World Cup we see European participants come back and reestablish positions. The first flaw to this I can think of is that Europe "shuts down" for the summer, but for now the above seems reasonable.

Another thought I had, and perhaps this ties in, conceptually if nothing else, with what Barry posted from Jeff Saut, is that some of the big selloffs of the last ten years have lasted about six weeks. The S&P 500 peaked on May 8.

One way or another, this mini-whoosh needs to correct. This either means a bounce up or time spent close to SPX 1250. Either one would be corrective.