Good Morning, Traders. For the last two trading weeks, the S&P has been in a virtual standstill as measured by the weekly bars you see pictured above in the blue circle. Although this past week brought us to new 2006 highs (briefly) in the S&P prices quickly floated back down to Earth and we essentially were flat for the second week in a row. The "market" as measured by the S&P opened at 1287.14 on Tuesday February 21st and closed at last Friday afternoon at 1287.23. A total move of about nothing in two weeks. On the one hand we broke out in the index to join the Dow in celebrating new highs for the year, but on the other if you can't close at those levels or above you are still stuck. And thats exactly a good way to characterize this market. A contraction of volatility for the last two weeks at the upper end of the $SPX's range for the year, with the Nasdaq still trying to play catch up and having yet to break out into new territory for 2006.

Friday's action didn't help much. A day that could only be described as weird. Huge swings in motion as the market moved flat to down off of the open then rocketed to take out 3 day highs over lunch and promptly fell back to its opening levels in late day trade. The ShadowTrader Core Sector List ended up split with the unlikely bedfellows of Coal, and Brokers leading it while semis, miners, and builders were weak. Breadth also closed close to even with just a slight negative bent on both markets. Advance decline lines were both off about 550-600 between the NYSE and Nasdaq. When the bell rang little was changed, Dow slipped 3.92, S&P lost 1.91, and the Nasdaq shed 8.51. Two dojis on weeklies of a major average like the one above would indicate that some sort of expansion of range should be around the corner. Should be an interesting week.

Peter Reznicek is Chief Equity Strategist for ShadowTrader.net a subsidiary of thinkorswim, and a Principal of the Prana Fund, a hedge fund.  Mr. Reznicek can be reached at preznicek@shadowtrader.net.