Today the major market indexes followed their usual pattern. The SPDR S&P 500 ETF NYSE:SPY) dipped lower during the first half hour of the day only to rally higher on light volume for the rest of the session so far. There were a couple of factors in the market that were telling us that the markets would trade this way. The first was the light trading volume ahead of tomorrow's highly anticipated FOMC meeting. Light volume always favor the upside action. Hence the old market adage, “never short a dull market”. It can't get more dull than this.

Many times day traders are very anxious and want to be involved in a trade all day. The market only gives a few good opportunities a day and that is when traders should react and take what the market is offering. During the InTheMoneyStocks.com Chat Room I see many traders wanting and pulling the trigger when the market is not giving the correct setup or signal to do so.

Trading is very similar to the lion in the jungle. The lion stalks his pray in the brush and he does not pick on the strongest animal in the pack.

The S&P 500 Index surged higher this past week gaining 38.34 into Friday's close. The early July support level remains intact at this time, and the broad based index has closed above the important July 15th pivot high resistance point. As long as the index can stay above this current 1100.00 area it could see further upside. However, as we have seen from the past six trading sessions this index can be very volatile. Therefore, it would be prudent to prepare for surprises in both directions with large point swings. If July has proven one thing it is that it will be volatile and choppy.

Solar stocks have been ripping higher over the couple months. Subsidies seem to be back in the mix for these companies and after the Gulf oil spill, alternate energy is back in favor regardless of recessions or depressions. Just in the last two months, First Solar, Inc. (NASDAQ:FSLR) has soared from $100.00 a high today of $139.07. China solar companies have been even hotter in the last two months with Trina Solar Limited (NYSE:TSL) jumping from $15.00 to a high today of $24.03.

A minor pivot day was alerted for today and the market dropped accordingly. Options expiration has come to a close and the institutions no longer have a reason to hold the market up. The massive rally late yesterday was a perfect fake out as called. The obvious timing of the Goldman Sachs Group, Inc. (NYSE:GS) and BP plc (ADR) (NYSE:BP) news sent the shorts running and the last few put holders screaming away. The massive late day surge in the markets even lured some call buyers in for an attempt at some easy money on a possible rally today.

Recently before the stock market bounce in early July the majority of traders and investors were frightened by the so called death cross on the Dow Jones Industrial Average and the S&P 500 Index. This is when a major moving average on a chart crosses over the larger moving average to the downside. Many regard this so called death cross as a very bearish stock market signal. At the same time as the death cross there was also a massive head and shoulders top in place that was publicized on every business news channel and radio program around the world.

What a week it was for the Dow Jones Industrial Average (INDEXDJX: DJI)! The highly followed index gained 512.00 points from the close of last week. In the previous Weekly Market Report I pointed out the 96.00 area as a support and mentioned that the market will rarely rollover when everyone is expecting it to do so. This week the head and shoulders top formation that was in place and being viewed by everyone is now a failed pattern which can often lead to a large move in the opposite direction. This is exactly what occurred last week.

The media and many analysts have painted China as the Great Depression reborn. You would think China is in such a mess right now, hell has actually frozen over. I love the panic and fear as some China small caps are now sparkling like diamonds in the rough. Many Chinese small caps are trading at price to earnings ratios of three to five. That is based on 2010 earnings. I am starting to seriously salivate over these low priced stocks as a longer term hold of six months or more.

Stocks rally despite a slowdown in the service sector
U.S. stocks rose on Tuesday, led by financial and technology shares, even though data showed U.S. non-manufacturing activity grew at a slower rate than expected in June.
An industry trade group says the service sector grew more slowly in June, yet another sign growth could weaken in the second half of 2010.
The Institute for Supply Management, a trade group of purchasing executives, says its index tracking service-oriented companies dipped to 53.8 last month from 55.4 in May.

Stocks drop again amid weak economic data
Selling has gained momentum following the May pending home sales figures, which showed a 30.0% month-over-month drop. The dramatic decline was roughly triple the size of the 10.5% slide that economists had expected, on average. That has completely overshadowed news that construction spending for May fell a mere 0.2% when a 0.9% decline had been expected.